1. The gold market remains under pressure but continues to hold support above $2,150 an ounce even as the U.S. housing sector shows some signs of stabilization as construction of new homes picks up. However, gold surged above $2,200 an ounce this week for the first time as investors grew more confident about the Federal Reserve’s path for rate cuts, boosting the appeal of non-interest-bearing bullion. Tuesday, the U.S. Commerce Department said that residential construction jumped 10.7% last month to a 1.521 million annualized rate, up from January’s revised rate of 1.374 million. The latest housing market data significantly beat expectations; according to consensus estimates, economists were looking for starts to rise to 1.43 million. For the year, housing construction is up 5.9%, the report said. The gold market is not reacting much to the latest housing market data as it continues to see some solid technical selling pressure. Economists have been closely monitoring the U.S. housing sector as it has struggled with rising mortgage rates and higher prices. Economists note that any improvement in the housing sector should further support the economy.

The Precious Metals Week in Review – March 22nd, 2024.
The Precious Metals Week in Review – March 22nd, 2024.

2. Home foreclosures are rising across the country as Americans continue to grapple with soaring interest rates and high living costs. Last month, there were 32,938 properties with foreclosure filings across the U.S., according to fresh figures from real estate data provider ATTOM. The February data signals an 8 percent increase in filings from the year before, but a slight 1 percent dip from January, when foreclosures jumped a huge 10 percent from the month prior. Foreclosures have been on the rise since the end of 2021, as banks make up for lost time after state and federal foreclosure bans expired. Housing affordability across the country is the worst it has been in decades, amid surging house prices, a lack of homes for sale and elevated mortgage rates. According to the latest data from government-backed lender Freddie Mac, the average 30-year fixed rate mortgage is 6.74 percent. Rates have been soaring by the Federal Reserve’s aggressive interest rate hiking campaign, which has taken benchmark borrowing costs to a 22-year high. And stubborn inflation has dashed investors’ hopes for immediate rate cuts in 2024.

3. Exxon CEO Darren Woods isn’t mincing words or actions as the broader market has finally started to turn its back on the ‘ESG’ fallacy. So far this year, Woods initiated arbitration against Chevron Corp. for trying to invest in Exxon’s large offshore oil project in Guyana and has sued investors pushing for emission reductions. Prior to that, he orchestrated a $60 billion acquisition, positioning Exxon as the top U.S. shale producer. Woods has also intensified his stance on climate objectives, asserting in speeches and interviews that fossil fuels remain essential to fulfill energy needs for the foreseeable future. He argues that achieving net-zero carbon emissions by 2050 is unrealistic, as there’s a general reluctance to bear the costs of cleaner alternatives. Greg Buckley, a portfolio manager at Adams Funds, added: “ESG was popular, but I think that return on capital is more popular at the end of the day. Shell and BP found out the hard way. Facts that don’t align with ill-informed prejudice are often infuriating. That doesn’t make them wrong. Someone needs to tell the truth about what it’s going to take to get to a net-zero future,” Emily Mir, a spokeswoman for Exxon, commented. While the U.S. government continues to try and micromanage markets and subsidize their virtue signaling preferences, 5% interest rates have been busy offering up a reality check to the Biden administration’s green energy pipe dream. A year after Biden’s significant climate legislation pledged substantial funding for the U.S.’s transition to clean energy, the sector has seen a sharp $30 billion decline in the value of its stocks over the past six months.

4. A fugitive crypto hedge fund founder grinned as he refused to apologize for blowing through billions of investors’ cash before his firm imploded. Kyle Davies and his business partner Su Zhu face over $3.5 billion in creditors’ claims after their bankrupt fund, Three Arrows Capital (3AC), crashed amid the 2022 crypto downturn. While Zhu was arrested and served three months in prison for failing to coordinate with liquidators, Davies managed to avoid the same fate by remaining on the run. In an appearance this week on the Unchained podcast, where he refused to reveal his location, Davies grinned as he was asked about whether he had any remorse over losing billions of investors’ money. “Am I sorry for a company going bankrupt? No, like, companies go bankrupt, almost every company goes bankrupt, right?” he said. Many have reacted with fury at Davies’ attitude in the podcast appearance, as he appeared to take a flippant approach to talking about the lost cash. At its peak, the fund managed around $18 billion, but suffered heavy losses when the LUNA and Terra cryptocurrencies collapsed. According to Capital.com, the founders then defaulted on loans after their hedge fund went bankrupt, which also came in part from their borrowing from over 20 institutions. Their demise came at the same time fellow crypto heavyweights were also facing consequences, as many said the vulnerabilities in the cryptocurrency industry were becoming more and more evident.

5. The Bank of Japan scrapped the world’s last negative interest rate, ending the most aggressive monetary stimulus program in modern history, while also indicating that financial conditions will stay accommodative for now. The bank’s board voted 7-2 to set a new policy rate range of between 0% and 0.1%, shifting from a -0.1% short-term interest rate, according to a statement at the conclusion of its two-day meeting Tuesday. “We judged that achieving the goal of sustainable 2% inflation has come within view,” Governor Kazuo Ueda said at a post-decision press conference. “The large-scale monetary easing policy served its purpose.” While vowing to keep policy easy until underlying price trends hit 2%, he also acknowledged that if positive trends for wages and prices spur inflation expectations, risks of bigger price upswings could result in a rate hike. The yen extended its decline versus the dollar to about 1% at 150.68 bringing it close to the weakest level this year. The BOJ’s move comes as other major central banks are set to hold policy rates this month. The Federal Reserve is expected to keep interest rates at a two-decade high for a fifth month as officials meet later this week. The Bank of England is set to leave its key rate at a 16-year high of 5.25% at its March 21 meeting and the European Central Bank earlier this month left interest rates unchanged for a fourth meeting. The Reserve Bank of Australia announced earlier Tuesday that its cash rate target will remain at 4.35%.

6. In the week ending March 16, the advance figure for seasonally adjusted initial claims was 210,000, a decrease of 2,000 from the previous week’s revised level. The previous week’s level was revised up by 3,000 from 209,000 to 212,000. The 4-week moving average was 211,250, an increase of 2,500 from the previous week’s revised average. The previous week’s average was revised up by 750 from 208,000 to 208,750.

7. EIA reports weekly declines in U.S. crude and gasoline supplies. Oil futures finished lower Wednesday, pulling back from five-month highs after back-to-back session gains, with prices pressured by strength in the U.S. dollar, even as the greenback pared some of its gains in the wake of Federal Reserve’s policy announcement. West Texas Intermediate crude for April delivery lost $1.79, or 2.1%, to end at $81.68 a barrel on the New York Mercantile Exchange. May Brent crude, the global benchmark, lost $1.43, or 1.6%, to $85.95 a barrel on ICE Futures Europe.

8. EUR/USD retreats towards 1.0800 and looks to post weekly losses. EUR/USD stays under bearish pressure and trades near 1.0850 in the America session on Friday as the cautious market mood helps the U.S. Dollar preserve its strength. The pair remain on track to close the second consecutive week in the red.

9. The USD/JPY pair slips to 151.00 in Friday’s late European session. The Japanese Yen has been underpinned against the Dollar as Japan’s hot February inflation data improved investors’ confidence in the Bank of Japan’s (BoJ) decision to pivot to policy normalization. The asset faces pressure despite the buoyant U.S. Dollar amid a significant improvement in the United States economic outlook. The Statistics Bureau of Japan reported that Japan’s annual National headline Consumer Price Index (CPI) grew at a stronger pace of 2.8% compared to the prior release of 2.2%. BoJ’s preferred inflation measure that excludes fresh food rose by 2.8%, as expected, compared to the former reading of 2.2%.

The Federal Reserve on Wednesday left forecasts that it would cut rates three times this year unchanged. And to hear it from Fed Chairman Jerome Powell, the reason is no mystery, the Fed’s inflation story hasn’t changed, either. Referring to inflation readings in January and February, which suggested progress on inflation moving back towards the Fed’s 2% target had stalled, Powell said these readings together “haven’t really changed the overall story, which is that of inflation moving down gradually on a sometimes-bumpy road toward 2%.” Over the balance of Powell’s press conference, the word “bumpy” was used in reference to inflation’s path at least a half dozen more times. And so, the bumps will continue. But as Powell made clear elsewhere in his press conference, returning inflation to 2% “is our goal, and we’ll achieve that goal.”

The U.S. housing market has a simple problem: affordability. But Fed Chairman Jerome Powell and his colleagues at the Federal Reserve don’t see this tension in the current economic expansion as theirs to resolve. “We’re not targeting housing price inflation, the cost of housing, or any of those things,” Powell said in a press conference in January. “Those are very important things for people’s lives. But they’re not — you know, those are not the things we’re targeting.” The Fed, rather, seeks to fulfill its dual mandate of achieving maximum employment and stable prices, which it defines as inflation that averages 2%. The central bank’s struggles on this latter part of its mandate are why interest rates are so high and are expected to remain there this week. Moreover, housing costs — and rent, specifically — remain the biggest factor in keeping inflation elevated. Home prices are at record highs. And the outlook on whether the supply needed to meet demand will make its way to the market is mixed, at best. Earlier this month, when Powell appeared on Capitol Hill, he was urged by lawmakers to do something about the cost of housing. Without proposing a solution, the Fed chair said the housing market is in a “very challenging situation.” After all, back in 2022, Powell called for a “reset” in the US housing market after low rates and a rapid shift in consumer desires created a frenzy during the pandemic. And while Powell called activity in the housing market “subdued” earlier this year, the Fed chair clearly views the central bank as being able to pull a single, indirect lever in the market — interest rates.

The energy industry gathered this week in Houston, Texas, for the annual CERAWeek by S&P Global conference. Amidst the panels and demonstrations, one message came through: Fossil fuels aren’t going anywhere anytime soon. Pierce Norton, CEO of pipeline operator ONEOK, said that demand for energy is only going to grow — a sentiment echoed throughout the conference. He also highlighted that demand is increasing even more rapidly because of the computing power needed for artificial intelligence and painted a picture of energy addition rather than energy transition. “The country started out actually using wood,” he said during an interview at CERAWeek. “And then we added coal, we added natural gas, we added nuclear, and then now you’ve got geothermal, you’ve got renewables, which is solar and wind.” His comments in Dubai happened to precede a near-term low in underlying oil prices in mid-December. Since then, WTI crude is up by more than 20%. And energy stocks have started to catch up. In the past month, the S&P Energy Index has rallied by about 8%, the best performance among the industry groups in the S&P 500.

Tesla has reduced production at its plant in China, according to people familiar with the matter, amid sluggish growth in electric-vehicle sales and intense competition in the world’s biggest auto market. The U.S. carmaker earlier this month instructed employees at its Shanghai facility to lower production of both the Model Y and Model 3, the two vehicles Tesla makes in China, by working five days a week instead of the usual 6 1/2 days. Demand for electric cars has been slowing in China and other major regions, including the U.S. and Europe. Tesla’s factory on the outskirts of Shanghai makes cars both for the domestic market and for export. Growth of electric-car sales in China is stalling after the government stepped away from a decade-long promotion of the sector and ditched nationwide subsidies at the end of 2022.

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. 15, 2024Mar. 22, 2024Net Change
Gold $2,156.82 $2,159.422.600.12%
Silver $25.20 $24.65-0.55-2.18%
Platinum $940.80 $896.10-44.70-4.75%
Palladium $1,081.76 $993.52-88.24-8.16%

Previous Year Comparisons

Mar. 23, 2023Mar. 22, 2024Net Change
Gold $1,979.73 $2,159.42179.699.08%
Silver $23.11 $24.651.546.66%
Platinum $980.52 $896.10-84.42-8.61%
Palladium $1,429.31 $993.52-435.79-30.49%

Here are your Short-Term Support and Resistance Levels for the upcoming week.

This is not a solicitation to purchase or sell.
© 2024, Precious Metals International, Ltd.

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