1. The gold market is seeing solid follow-through buying activity following last week’s record closing price. The precious metal has pushed above $2,150 an ounce, and according to one market analyst, it has room to run. In an interview Jess Felder, founder of the Felder Report, he said he has been looking for gold to break to the upside as the price action has generated some very bullish technical patterns. “Gold is forming consistent bullish flag patterns. The price spikes higher, consolidates for a period and then we see another price spike higher. Gold has been looking to break higher for a while now. From a purely technical standpoint, it looks to me like there’s a projected target of a couple hundred dollars higher for gold in the short term, but longer term, we’re looking at $2,700, $2800, perhaps over the next year or two. Technically, gold just looks very, very good.” Along with gold’s technical outlook, Felder said that the precious metal has a robust fundamental outlook as he does not expect the Federal Reserve will be able to bring inflation down to its 2% target. He added that persistently higher inflation could cause investors to lose faith in the U.S. central bank, weakening the dollar and making gold an attractive asset. Silver prices are higher and scored a two-month high overnight.
2. U.S. stocks slid on Tuesday, pulling further back from record highs as uncertainty over interest rate cuts and the continued strength of tech stocks brought a note of wariness to the market. The debate now is whether the tech gains behind the recent record-setting stock rally have reached their peak, as downbeat news saps the “FOMO” — fear of missing out — seen as keeping investors engaged. At the same time, faith in coming easing by the Federal Reserve took a knock after comments by policymaker Raphael Bostic. The Atlanta Fed president said he sees just one rate cut this year, penciled in for the third quarter. Investors are now even more focused on Fed Chair Jerome Powell’s testimony to Congress on Wednesday. His words will be closely watched for any change in the mantra that policymakers need to be convinced inflation is conquered before any move.
3. Federal Reserve Chairman Jerome Powell significantly downplayed the possibility of the central bank issuing its own digital currency, and said if it ever came to pass, the government would play a limited role. Testifying before Congress Thursday, Powell said policymakers were “nowhere near” taking action on adopting such a tool. “People don’t need to worry about a central bank digital currency, nothing like that is remotely close to happening anytime soon,” he told the Senate Banking Committee. He added that the Fed has no interest in establishing accounts for individuals that would compete with the banking system, and it would not support any Fed monitoring of personal financial transactions. “If we were to ever do something like this, and we’re a very long way from even thinking about it, we would do this through the banking system, the last thing…we the Federal Reserve would want would be to have individual accounts for all Americans,” he said.
4. Swaths of the U.S. are at risk of power outages with artificial intelligence data centers and cryptocurrency mines doubling forecasted energy demand over the coming years. Without intervention, the already ailing national grid will be pushed to its limits by skyrocketing demand, driven by rapid innovations in AI, cryptocurrencies, and clean energy initiatives all of which require vast amounts of power. Projections for electricity demand over the next nine years have more than doubled from 221,000 gigawatt hours last year to 564,000 gigawatt hours this year, according to the North American Electric Reliability Corp. The manufacturing of ‘clean power’ products like solar panels and electric car batteries is also driving demand, requiring new factories and hook-ups to the grid. Demand outstripping supply will likely lead to shortages across the country, with some areas worse hit than others. The high-risk areas cover parts of Arkansas, Illinois, Indiana, Iowa, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, North Dakota, South Dakota, Texas, and Wisconsin. Meanwhile the West of the country is at ‘elevated risk’ of shortages over the next four years.
5. A leading economist has laid out ten reasons why he does not believe the Federal Reserve will cut interest rates in 2024. Torsten Slok, chief economist of global asset manager Apollo, has added his voice to a growing chorus of experts predicting rates will not fall below their current 22-year-high this year. In a blog post, Slok cited a red-hot economy, still-rising inflation, increasing rents and a strong labor market as the main reasons why the Fed will not ease up on its strict tightening cycle. Slok said: “The market came into 2023 expecting a recession. The market went into 2024 expecting six Fed cuts. The reality is that the US economy is simply not slowing down, and the Fed pivot has provided a strong tailwind to growth since December. The bottom line is that the Fed will spend most of 2024 fighting inflation. As a result, yield levels in fixed income will stay high,” he concluded. His comments came after figures showed the personal consumption expenditures (PCE) index – the Fed’s preferred measure of inflation – had increased at its fastest rate since last year. The PCE index – which excludes volatile food and energy prices – increased by 0.4 percent between December and January. In a research note to clients following the release, rates strategists at Bank of America said the findings ‘raise the risk of the Fed signaling fewer cuts in 2024.’
6. In the week ending March 2, the advance figure for seasonally adjusted initial claims was 217,000, unchanged from the previous week’s revised level. The previous week’s level was revised up by 2,000 from 215,000 to 217,000. The 4-week moving average was 212,250, a decrease of 750 from the previous week’s revised average. The previous week’s average was revised up by 500 from 212,500 to 213,000.
7. Crude oil futures posted a weekly loss as lackluster demand out of China collided with a market that the International Energy Agency views as well supplied. The West Texas Intermediate contract for April fell 92 cents, 1.17%, to settle at $78.01 a barrel on Friday. The Brent contract for May dropped 88 cents, or 1.06%, to settle at $82.08 a barrel. U.S. crude and the global benchmark lost 2.45% and 1.76%, respectively, for the week. Crude oil imports in China fell about 5.7% to 10.8 million barrels per day in the first two months of the year, compared to 11.44 million bpd in December, according to S&P Global Commodity Insights.
8. EUR/USD targets 1.1000 on a weaker dollar post-payroll. The EUR/USD picks up extra upside traction and opens the door to a potential test of the psychological 1.1000 hurdle on the back of increased selling pressure in the Greenback following February’s Non-Farm Payrolls (+275).
9. USD/JPY plunges to 147.00 on BoJ’s rate bets, U.S. NFP (Non-Farm Payrolls). USD/JPY extends its losing spell as the Japanese Yen strengthens on hawkish BoJ bets. The U.S. Dollar weakens on firm expectations for the Fed reducing interest rates in June. Investors await the NFP for fresh guidance.
Gold has added about $100 in the past five sessions, fueled by a combination of expectations for monetary easing, geopolitical tensions, and the risk of a pullback in equity markets. The rising risk of a stock market correction, flagged by weak U.S. manufacturing data on Friday may have persuaded some investors to move out of equities and into gold. Owning gold and silver is a good way to hedge against counterparty risk.
What exactly is counterparty risk?
In simple terms, it is the possibility that the party on the other side of a transaction might not fulfill its obligation. Most transactions and investments involve some level of counterparty risk. If I invest in a stock, there is the possibility the company will go belly-up. If I buy a government bond, there is a chance that the issuing country could be overthrown. If I rent out my house, the tenant might stop paying. And while you might not realize it, putting money in the bank comes with counterparty risk. The bank could freeze my account for any number of reasons, making it impossible for me to withdraw cash. This is why we have the FDIC. Of course, there is counterparty risk there as well. Nothing guarantees that this quasi-government entity will make you whole. Physical silver and gold impose no counterparty risk. If you own physical metals and store them safely, there isn’t another party involved. Nobody can default on gold or silver. Its value will never go to zero. Gold and silver remain liquid under virtually any market conditions. Gold and silver would likely increase in value if there was a significant economic collapse because they are real money. It’s also important to remember that while physical gold and silver create virtually no counterparty risk, gold, and silver ETFs and other “paper gold” products do. A fund traded on the market claiming to hold physical metal may or may not have it on hand.
Data from the Bureau of Labor Statistics released Friday showed the labor market added 275,000 nonfarm payroll jobs in February, significantly more additions than the 200,000 expected by economists. Meanwhile, the unemployment rate increased to 3.9% from 3.7% in January. This marks the first move higher in the unemployment rate in four months as it now sits at the highest level seen in the last two years.
Half of Americans have been denied at least one loan since the Federal Reserve started hiking interest rates in March 2022, a new survey shows. Households are becoming increasingly reliant on credit to absorb higher living costs which have been pushed up by rampant inflation. Yet research has found that Americans are struggling to secure access to credit, with poor earners and those with low credit scores are worst affected. Of the 50 percent of individuals who had been denied a loan, some 17 percent said they had been rejected by more than one. And eight in ten said the denial had negatively impacted their finances. Bankrate data shows the average credit card APR is now 20.75 percent while the average rate on a 30-year mortgage is ow 6.94 percent, according to Freddie Mac. High rates make banks and financial firms more reluctant to lend money amidst fears they will struggle to pay it back – despite families needing the support more than ever. Bankrate economic analyst Mark Hamrick said: “Banks and other lenders are constantly mindful of the potential downsides of both the changing economic environment, as well as the risks that people get behind on payments – or worse. One way they account for that is for financial service firms to hold on to more of their money.” The rate of annual inflation was hovering at 3.1 percent in January – above the 2.9 percent figure predicted by economists and well above the Fed’s 2 percent target.
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)
| Mar. 1, 2024 | Mar. 8, 2024 | Net Change | ||
| Gold | $2,084.62 | $2,184.66 | 100.04 | 4.80% |
| Silver | $23.13 | $24.39 | 1.26 | 5.45% |
| Platinum | $885.25 | $913.65 | 28.40 | 3.21% |
| Palladium | $958.51 | $1,021.35 | 62.84 | 6.56% |
| Dow | 39098.04 | 38726.07 | -371.97 | -0.95% |
Previous Year Comparisons
| Mar. 10, 2023 | Mar. 8, 2024 | Net Change | ||
| Gold | $1,864.34 | $2,184.66 | 320.32 | 17.18% |
| Silver | $20.50 | $24.39 | 3.89 | 18.98% |
| Platinum | $961.81 | $913.65 | -48.16 | -5.01% |
| Palladium | $1,386.17 | $1,021.35 | -364.82 | -26.32% |
| Dow | 32909.70 | 38726.07 | 5816.37 | 17.67% |
Here are your Short-Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 2042/2001/1978 | 23.51/22.89/22.50 |
| Resistance | 2195/2215/2230 | 24.54/24.90/25.00 |
| Platinum | Palladium | |
| Support | 871/857/847 | 937/918/903 |
| Resistance | 917/935/950 | 1040/1056/1075 |