1. U.S. stocks wobbled on Monday as investors kicked off a big week that will see a fresh inflation data test for rate-cut views and the start of first-quarter earnings season. The Dow Jones Industrial Average, the S&P 500 and the tech-heavy Nasdaq Composite wavered around the flat line after opening with slight gains. A strong jobs report helped lift stocks on Friday but couldn’t fend off weekly losses as doubts about the Federal Reserve’s resolve for interest-rate cuts preyed on minds. U.S. bonds sold off last week amid that uncertainty, and the pressure continued Monday with a slight rise in the 10-year Treasury yield to above 4.45%. Other concerns added to the unsettled mood: Divided views on policy from Fed speakers, growing noise around the coming presidential election, and a spike in oil prices from escalating Middle East tensions that could fan inflation pressures. U.S. consumer sentiment ebbed in April while inflation expectations for the next 12 months and beyond increased, a survey showed on Friday.

The Precious Metals Week in Review – April 12th, 2024.
The Precious Metals Week in Review – April 12th, 2024.

2. Gold prices are higher and hit another record high with gold reaching $2,420.50 on Friday morning. Silver prices hit a three-year high, with prices hitting $29.90. Save-haven demand remains a feature in the two precious metals. Fully bullish technical are also fueling speculative buying interest in gold and silver. Broker SP Angel said today in an email that the gold market rally has “dumfounded” most analysts, given the break from its correlation with U.S. Treasuries, which have sold off over the past month. Also, the U.S. dollar has been stronger and that’s usually bearish for gold and silver. “Central bank buying has been a sustained source of support for gold, with China’s PBOC adding gold for the 17th month in a row,” said the broker, adding this has fueled speculation over a potential devaluation of the Chinese yuan, as well as geopolitical concerns over heightened aggression against Taiwan.

3. Traders’ conviction on three quarter-point interest-rate cuts from the Federal Reserve this year is quickly dissipating, with markets now favoring just two reductions. Interest-rate swaps imply around 60 basis points of U.S. monetary easing this year, which means two cuts is the most likely outcome with the first expected by September. On Friday, the chance of a third cut was still above 50%. At the start of the year, expectations were widespread that the Fed’s 11 rate increases in the past two years would not only curb inflation but also cause economic stress, leading the market to bet on as many as six cuts this year. Instead, progress toward lower inflation has slowed, growth metrics have remained robust, and investors continue to shovel money into stocks and corporate bonds at a pace that suggests the economy doesn’t yet require lower rates.

4. U.S. consumer prices came in hotter than expected in March, according to the latest data from the Bureau of Labor Statistics released Wednesday morning. The Consumer Price Index (CPI) rose 0.4% over the previous month and 3.5% over the prior year in March, an acceleration from February’s 3.2% annual gain in prices. The data matched February’s month-over-month increase. Both measures came in ahead of economists’ forecasts of a 0.3% monthly increase and a 3.4% annual increase, according to the data. The hot print complicates the Federal Reserve’s next move on interest rates as the central bank works to bring inflation back down to its 2% target. Fed officials have categorized the path down to 2% as ‘bumpy.’ “Today’s crucial CPI print has likely sealed the fate for the June FOMC meeting with a cut now very unlikely,” Seema Shah, chief global strategist at Principal Asset Management, said recently. “This marks the third consecutive strong reading and means that the stalled disinflationary narrative can no longer be called a blip.”

5. Mortgage rates in the U.S. rose for a second straight week. The average for a 30-year, fixed loan was 6.88%, up from 6.82% last week and matching the level reached in early March, Freddie Mac said in a statement Thursday. Higher borrowing costs are weighing on would-be homebuyers in what’s typically the busiest season for purchases. However, the housing market recently has shown signs of resilience. Sales of previously owned homes picked up in February, and more owners have been listing their properties. But purchases remain prohibitively expensive in many areas of the country, and climbing mortgage costs threaten to further erode affordability for buyers.

6. In the week ending April 6, the advance figure for seasonally adjusted initial claims was 211,000, a decrease of 11,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 221,000 to 222,000. The 4-week moving average was 214,250, a decrease of 250 from the previous week’s revised average. The previous week’s average was revised up by 250 from 214,250 to 214,500.

7. Oil surged as much as 3% on Friday to its highest level since October on reports that Israel is preparing for an imminent attack on government targets from Iran as soon as Saturday. West Texas Intermediate futures rose to touch an intraday 2024 high of $87.30 per barrel, while Brent, the international benchmark price, touched $92.11 per barrel. Crude prices have been on an upward trend amid continued output cuts by oil alliance OPEC+ and tensions stemming from the Israel-Hamas war. Ukrainian drone attacks against Russian refineries have also impacted futures to the upside. While analysts have outlined a possible path towards $100 Brent, they also predict OPEC members will step in with spare capacity to keep prices from getting too high.

8. The EUR/USD pair extends its downside to a near five-month low around 1.0660 in Friday’s European session. The major currency pair falls sharply on firm speculation that the European Central bank (ECB) will begin reducing interest rates from the June meeting. The ECB kept its key borrowing rates unchanged on Thursday at 4.5% to maintain downward pressure on the consumer price inflation. In the monetary policy statement, the ECB said that restrictive financial conditions and interest rate hikes yet made are weighing on the overall demand and pushing downward pressure on inflation.

9. The Japanese Yen drops to a fresh multi-decade low amid the divergent Fed-BoJ policy expectations. Intervention fears might hold back the JPY bears from placing fresh bets and cap the USD/JPY pair. Spot prices remain on track to register strong gains and end in the green for the fifth successive week.

Gold and silver prices are sharply higher, with gold hitting a record high and silver a three-year high. The general marketplace is very uneasy heading into the weekend, as geopolitical tensions have heated up just recently. That’s driving stronger safe-haven demand for gold and silver. Precious metals bulls have been impressed with gold and silver rallying despite higher bond yields. Broker SP Angel said in a morning dispatch that Chinese gold ETFs have seen huge inflows, with some up 40% since the end of March. “Chinese investors are rushing to safe- haven assets as their property sector continues to slump and their equity market fares little better. China’s Yuan remains under pressure, with the PBoC continuing to fix the currency onshore at 7.1 per dollar,” said the broker. Central banks are also reported to be snapping up gold.

Hot inflation data has put the Federal Reserve’s debate over a first interest rate cut on a potential collision course with the presidential election calendar, although a parade of top-level Fed-watching economists also predict the Fed won’t make its move until after Americans go to the polls. Rate futures markets now show investors see a first rate cut as most likely occurring at the Fed’s Sept. 17-18 meeting after data showed inflation through the entire first quarter of 2024 was stiffer than expected and had demonstrably slowed progress on bringing it back to the Fed’s 2% target. No Fed official has offered a potential start date, but policymakers’ projections last month indicated on balance they still expected to deliver three, quarter-percentage-point rate cuts this year, an outlook first presented last December. At the same time, a core of professional Fed watchers now sees an outcome where the Fed misses the presidential election cycle entirely, though that doesn’t mean the central bank won’t be a campaign focus.

U.S. stocks opened sharply lower on Wednesday after a key inflation report showed an unexpected uptick in consumer prices last month. The Dow Jones Industrial Average fell over 1%, or more than 400 points, while the S&P 500 dropped about 1.2%. The tech-heavy Nasdaq Composite was down over 1.2%. Meanwhile, bond yields soared. The 10-year Treasury yield gained as much as 14 basis points on Wednesday morning, touching above 4.5% for the first time in 2024.

Policymakers have averted a global recession and a period of stagflation and brought inflation down considerably, but unmanageable debt loads, and growing trade disputes continue to threaten growth, according to IMF Managing Director Kristalina Georgieva. She said the economic policies countries choose “will define how this decade is remembered — will it go down in history as ‘the Turbulent Twenties,’ a time of disturbance and divergence in economic fortunes; the ‘Tepid Twenties,” a time of slow growth and popular discontent; or ‘the Transformational Twenties,’ a time of rapid technological advancements for the good of humanity?” She pointed to “strong labor markets and an expanding labor force” as a significant contributor to the resilience of the world economy and said that immigration “has been especially helpful in countries with aging populations. We have avoided a global recession and a period of stagflation—as some had predicted,” Georgieva said. “But there are still plenty of things to worry about.” She said that by historical standards, global economic activity is still weak. “Prospects for growth have been slowing since the global financial crisis. Inflation is not fully defeated. Fiscal buffers have been depleted. And debt is up, posing a major challenge to public finances in many countries,” she said.

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.

Friday to Friday Close (New York Closing Prices)

Apr. 5, 2024Apr. 12, 2024Net Change
Gold $2,326.33 $2,356.3330.001.29%
Silver $27.44 $28.310.873.17%
Platinum $930.75 $987.4056.656.09%
Palladium $1,003.87 $1,058.8855.015.48%

Previous Year Comparisons

Apr. 14, 2023Apr. 12, 2024Net Change
Gold $2,003.81 $2,356.33352.5217.59%
Silver $25.33 $28.312.9811.76%
Platinum $1,046.06 $987.40-58.66-5.61%
Palladium $1,497.66 $1,058.88-438.78-29.30%

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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