1. U.S. consumers raised their optimism about the economy for the third straight month in February to cap a week that offered investors a complicated picture. The initial read on consumer sentiment in February showed the index inched higher from January. The index registered a reading of 79.6, up from the 79.0 seen in January’s final look at sentiment but slightly below the 80 that was expected by economists. Overall, sentiment is about 30% higher than it was in November. Earlier this week, January’s Consumer Price Index (CPI) report showed consumer prices rose more than expected last month while retail sales registered their largest monthly drop in almost a year to start 2024. On a “core” basis, which strips out the food and energy prices, inflation has risen 3.7% year-over-year, a slowdown from the 3.9% increase seen in December. So far, a more complicated outlook for the Federal Reserve — which could see plans for an interest rate cut in the first half of this year delayed by inflation pressures has left investors and consumers undeterred. Between enthusiasm over AI, an improved backdrop for corporate profits boosting the stock market, and consumer expectations for the next several years on the rise, it becomes challenging for investors to get too worked up about producer prices rising more than expected or retail sales logging a one-month plunge.
2. Gold and silver prices are higher in midday U.S. trading Thursday, on corrective rebounds following recent selling pressure and after a U.S. retail sales report that was weaker than expected. April gold was last up $9.60 at $2,013.90. March silver was last up $0.508 at $22.895. Technically, April gold futures saw short covering featured after prices hit a three-month low Wednesday. The Bears have an overall near-term technical advantage. Prices are in a nine-week-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the February high of $2,083.20. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at the November low of $1,975.10. March silver futures also saw short covering after prices hit a four-month low on Wednesday. The silver bears have an overall near-term technical advantage. A nine-week-old downtrend is in place on the daily bar chart. Silver Bulls’ next upside price objective is closing prices above solid technical resistance at $23.445. The next downside price objective for the bears is closing prices below solid support at the October low of $21.17.
3. In the late 19th century Alexander Hamilton wrote “National debt, if it is not excessive, will be to us a national blessing.” A nice idea in theory, but America’s governments since then haven’t quite stuck to the plan. Instead, the U.S. economy is resting atop a public debt exceeding $34 trillion, with its debt-to-GDP ratio sitting at around 120%. Perhaps not the blessing the Founding Fathers had once envisioned. Now, alarm bells are beginning to ring with increasing frequency and volume. Jamie Dimon says Washington is facing a global market “rebellion” because of the tab, it is racking up, while Bank of America CEO Brian Moynihan believes it’s time to stop admiring the problem and instead do something about it. And despite the issue being the “most predictable crisis we’ve ever had” according to former Speaker of the House Paul Ryan, a summary Dimon agrees with, it’s an item that isn’t yet top of the political agenda. Housing, construction, cars, and any other interest-rate-sensitive sectors will be “disproportionately” impacted by an attempt to rebalance public debt. Higher government debt will typically tend to raise interest rates. If the government creates debt, it must be financed by taxes or money creation. If debt gets out of hand, money creation historically has been the false solution as it is easier to issue money than raise taxes but often more disastrous in the long term. Any rise in interest rates will shock younger generations coming up the housing ladder over the next few decades.
4. China is in the midst of a breakneck expansion of its copper industry that’s reshaping global flows of the essential metal for the world’s energy transition. The Asian nation’s grip on the supply of other green metals like lithium, cobalt, and nickel, used in electric vehicle batteries, has already prompted worried Western governments to encourage separate supply chains. Meanwhile, China’s production of refined copper and its share of world output is heading for a record this year after a burst in construction of new smelters. Copper has been labeled the most important commodity in the age of decarbonization for its use in everything from EVs to wind turbines and vastly expanded power grids. The booming Chinese demand for green technologies has been a bright spot for an otherwise beleaguered world metals market in 2023. The smelter build-up will be a key talking point for hundreds of copper-industry executives descending this week on China’s commodity hub of Shanghai for Asia Copper Week. Miners and smelters will negotiate key annual ore-supply contracts, and attendees will take the latest temperature of Chinese demand. China’s copper smelting capacity will increase by another 45% by 2027, accounting for 61% of expected new plants around the world in that period.
5. The Biden administration and automakers are in the final stages of negotiating over ambitious new rules to accelerate the electric-vehicle transition that could cost Detroit’s automakers billions and fuel an election-year clash over climate policy. General Motors, Ford, and Stellantis — the European parent of U.S. based Ram and Jeep have warned they cannot profitably transition their truck-heavy U.S. fleets that quickly. The United Auto Workers, which represents about 146,000 workers at the Detroit Three, has endorsed Biden for re-election. But the union has told the administration its drive for EVs puts jobs at risk. Groups representing other auto dealers have joined in criticism, citing the slowdown in EV sales growth. The Alliance for Automotive Innovation, which represents other established automakers, said the proposals could expose U.S. automakers to $14 billion in fines for failing to hit the CO2 targets. The impending rules also have implications for Biden’s re-election campaign. Michigan, home to thousands of UAW members who build Detroit-brand trucks and SUVs, is a pivotal state in the contest to capture the White House.
6. In the week ending February 10, the advance figure for seasonally adjusted initial claims was 212,000, a decrease of 8,000 from the previous week’s revised level. The previous week’s level was revised up by 2,000 from 218,000 to 220,000. The 4-week moving average was 218,500, an increase of 5,750 from the previous week’s revised average. The previous week’s average was revised up by 500 from 212,250 to 212,750. The previous week’s level was revised down by 6,000 from 1,871,000 to 1,865,000. The 4-week moving average was 1,870,500, an increase of 22,250 from the previous week’s revised average.
7. Oil’s bumpy start in 2024 has turned into a steady climb in recent weeks, with futures for West Texas Intermediate and Brent up more than 9% and 7% year to date, respectively. On Friday, WTI traded above $78 per barrel while Brent hovered above $83 per barrel, both on pace for their fourth weekly gain out of the past five. Escalating tensions in the Middle East, easing concerns of too much US production, and ongoing cuts from the oil producer’s alliance, OPEC+, have kept prices on an upward trajectory.
8. EUR/USD recovered above 1.0750 after dropping to a daily low near 1.0730 in the American session. The Euro (EUR) retreats after hitting a new two-day high as a measure of inflation on the producer side in the United States, suggesting the Federal Reserve’s job is not done. The Greenback (USD) rose as interest rate traders have begun to align with the Fed’s view of three rate cuts towards 2024. At the time of writing, the EUR/USD trades at 1.0759, down 0.08%
9. USD/JPY is consolidating gains below 150.50 in the European morning on Friday. The Japanese Yen stalls a two-day rebound from the YTD low. The US Dollar regains upside momentum in tandem with the US Treasury bond yields while BoJ Ueda’s speech does not inspire the Yen.
Fed officials have been warning that more time is needed before rate cuts can begin. A hotter-than-expected inflation reading Tuesday reinforced that cautious view. Investors are starting to listen. Markets are now pricing in a nearly 80% chance the Fed will cut rates in June, dialing back previous bets the central bank would begin cutting rates in May. “The much-anticipated CPI report is a disappointment for those who expected inflation to edge lower, allowing the Fed to begin easing rates sooner rather than later,” said Quincy Krosby, chief global strategist for LPL Financial. “Across the board numbers were hotter than expected, making certain that the Fed will need more data before initiating a rate-cutting cycle.” The Fed “has a lot to think about,” Sahm Consulting founder Claudia Sahm said on Tuesday. Fed officials have been trying to send signals over the last month and a half that cuts will likely happen later than some investors might expect.
Part of the soft-landing thesis that’s taken over markets in the past few months has been consistent stronger-than-expected data on consumer spending. A fresh reading on that trend is set to greet investors on Thursday with the January retail sales report. Economists expect retail sales to decline 0.2% in January from the prior month. Bank of America economist Michael Gapen is anticipating a “soft” print due to seasonal factors and widespread winter storms that likely disrupted retail spending in January. But Gapen doesn’t believe this changes the overall narrative for the consumer. “Sifting out the noise, however, the consumer looks healthy, with upside risks to spending from accelerating real wages,” Gapen wrote in a note to clients. The real wages metric Gapen references, which is the wage Americans see after subtracting headline inflation from their wage growth, was recently listed as a reason the U.S. economy has skirted recession amid higher interest rates.
Retail sales slipped more than Wall Street expected in January, raising questions of whether America’s resilient consumer could be losing steam. Retail sales fell 0.8% in January from the month prior according to Census Bureau data. Economists had expected a 0.2% decrease in spending, according to the data. December retail sales previously posted a surprise 0.6% increase but that was revised down to 0.4% in Thursday’s release. The month-over-month decline in January was the largest since March 2023. Nine of the 13 categories highlighted in the release saw decreases from a month ago. The January report was expected to be closely watched by investors looking for signs of a “soft landing” in the US economy, where inflation cools to the Fed Reserve’s targeted 2% rate without an extreme downturn in economic activity.
Volatility should be expected to remain high as investors will be closely watching for hints on upcoming monetary policy direction. Many investors have redoubled their efforts to ensure that their portfolios are sufficiently diversified in the hopes that they will be able to withstand corrections in multiple market sectors. Many of these investors have included physical precious metals as part of their diversification plans, given their long history as a hedge against both inflation and during times of economic turmoil. Remember, the key to profitability through the ownership of physical precious metals is to own the physical product and hold it for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long run.
Trading Department – Precious Metals International Ltd.
Friday to Friday Close (New York Closing Prices)
| Feb. 9, 2024 | Feb. 16, 2024 | Net Change | |
| $2,024.68 | $2,013.35 | -11.33 | -0.56% |
| $22.53 | $23.43 | 0.90 | 3.99% |
| $876.05 | $910.03 | 33.98 | 3.88% |
| $871.00 | $955.36 | 84.36 | 9.69% |
| 38671.30 | 38621.26 | -50.04 | -0.13% |
Previous Year Comparisons
| Feb. 17, 2023 | Feb. 16, 2024 | Net Change | |
| $1,840.84 | $2,013.35 | 172.51 | 9.37% |
| $21.73 | $23.43 | 1.70 | 7.82% |
| $921.46 | $910.03 | -11.43 | -1.24% |
| $1,509.25 | $955.36 | -553.89 | -36.70% |
| 33830.58 | 38621.26 | 4790.68 | 14.16% |
Here are your Short-Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 2010/1997/1980 | 22.24/21.88/21.63 |
| Resistance | 2041/2057/2071 | 23.46/23.90/24.00 |
| Platinum | Palladium | |
| Support | 862/852/835 | 845/832/804 |
| Resistance | 914/935/990 | 986/1014/1028 |