1. Gold is considered a unique asset due to its enduring value, historical significance, and application in various technologies like computers, spacecraft, and communications equipment. Commonly regarded as a “safe haven asset,” gold is something investors typically buy to protect themselves during periods of global uncertainty and economic decline. Gold has performed strongly in recent years, especially in 2024. Persistent inflation combined with multiple wars has driven up demand for gold, helping it set a new all-time high of over $2,400 per ounce. To put this into perspective, let’s review the performance of gold alongside the S&P 500. Over the five-year period, gold has climbed an impressive 81.65%, outpacing even the S&P 500. Consumers aren’t the only ones buying gold, either. Central banks around the world have been accumulating gold in large quantities, likely as a hedge against inflation. According to the World Gold Council, these institutions bought 1,136 metric tons in 2022, marking the highest level since 1950. Figures for 2023 came in at 1,037 metric tons.

The Precious Metals Week in Review – April 19th, 2024.
The Precious Metals Week in Review – April 19th, 2024.

2. U.S. stocks rose Monday as worries over the fallout from Iran’s attack on Israel eased, allowing focus to return to earnings season and inflation risks to rate-cut hopes. Focus is shifting as investors shrug off initial concerns of a full-blown war in the Middle East after Iran’s direct missile and drone strike on Israel on Saturday. Efforts by the U.S. to encourage Israel not to retaliate have helped settle nerves, in part given the well-telegraphed attack allowed damage to be contained. Stocks have come under pressure in recent days as earnings season got off to a lackluster start and concerns persisted that inflation has stalled in cooling to the Federal Reserve’s 2% target. Traders have scaled back bets on the depth of Fed interest-rate cuts this year in the face of disappointing economic data.

3. Retail sales topped Wall Street analysts’ expectations in March as consumers continued to spend despite a higher interest rate environment. Retail sales for the month increased 0.7% from the previous month, according to Census Bureau data. Economists had expected a 0.4% increase in spending. Meanwhile retail sales in February were revised up to an increase of 0.9%, from a prior reading of 0.6%. This is the second consecutive monthly uptick in retail sales, suggesting January’s surprise 1.1% decrease was more an aberration than a trend. March sales, excluding auto and gas, increased by 1%, above consensus estimates for a 0.3% increase. “The strong rise in retail sales in March and upward revision to February’s data will further support the Fed’s stance that there is no rush to start lowering interest rates,” Capital Economics deputy chief economist Andrew Hunter wrote in a note to clients on Monday. This strength in the economy has come as recent inflation reports have shown price increases aren’t easing as quickly as initially hoped. The combination of stickier-than-expected inflation with an economy that’s still growing has economists believing the Federal Reserve can wait longer to cut interest rates without tipping the economy into recession.

4. Although Western investors continue to ignore gold even as prices continue to hit record highs, they are no longer actively getting in the way of higher prices, which means the current rally has legs to run higher, according to one market analyst. In a recent interview, Robert Minter, Director of Investment Strategy said that gold’s rally to record highs above $2,400 an ounce is just getting started. Minter pointed out that central bank demand hasn’t gone away; however, the supply of gold has dried up as ETF selling has slowed to a trickle. Although central bank gold buying has slowed somewhat in recent weeks, Minter said the overall trend in official purchases remains higher. “If you were a prudent central bank fund manager in some of these countries, you would diversify away from the dollar to reduce your risk, plain and simple,” he said. However, the broader question remains: when will Western investors embrace gold again? Minter said that he expects Western investors to be waiting for an actual rate cut from the Federal Reserve. While the timing of the Federal Reserve’s easing cycle remains a moving target, Minter said that there is no question that interest rates will have to come down. “The Fed has made enough mistakes in the last three years that I think they’re very cautious not to make another,” he said. “If you were the Chair, you would have to know the impact of the magnitude of the rate rises you’ve done in a short time will have on the economy.”

5. U.S. homebuilder sentiment leveled off this month after a recent surge as would-be home buyers look for signs borrowing costs will fall. The National Association of Home Builders index of housing market conditions held at 51 in April, still the highest since July but breaking a string of four straight monthly gains, according to data released Monday. The reading matched the median estimate of economists surveyed. “April’s flat reading suggests potential for demand growth is there, but buyers are hesitating until they can better gauge where interest rates are headed,” NAHB Chief Economist Robert Dietz said. The latest figure represents a pause in what is otherwise a resurgent housing market. Some of the nation’s biggest homebuilders have recently reported robust order books and said consumers are growing accustomed to still-high mortgage rates. In a sign of the market’s fragility, an index of homebuilder stocks slipped 5.1% on April 10 after a higher-than-expected inflation report weakened hopes the Federal Reserve will cut interest rates soon. The homebuilder group’s measure of expected sales in the next six months slipped to 60 this month from 62, the first drop since November. Measures of current sales and prospective buyer traffic increased slightly. Builders have been backing away from price cuts as mortgage rates stabilized below the nearly 8% levels they hit last fall.

6. Ex-automotive executives have said America’s electric vehicle push happened ‘too soon and too fast’, amid slumping EV sales. Former Ford, Chrysler and General Motors executive Bob Lutz said that the drive toward electric cars needed to be gradual, and vehicle charging times and the charging infrastructure across the U.S. have been major issues in widespread adoption. Sales of electric cars are slowing, with Tesla reporting its first year-on-year sales drop since 2020. The automaker delivered 386,810 vehicles in the first three months of the year, down almost 9 percent from the same period in 2023. The car research site sees EVs making up just 8 percent of the market share in 2024. In some major cities last year, EVs made up just 3 percent of new car registrations. Lutz said. “The problem with the whole EV movement is that there was a colossal amount of hype behind it, largely from what I like to call the liberal mainstream media, making it sound like everybody’s next vehicle was going to be an EV. And of course, the government was pushing it, because of their climate change policies. And it just plain wasn’t going to happen.” Many consumers have complained how a lack of charging stations in rural areas means that owning an EV is an unrealistic goal for many.

7. The number of Americans filing new claims for unemployment benefits was unchanged at low levels last week, pointing to continued labor market strength. Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 212,000 for the week ended April 13, the Labor Department said on Thursday. Economists polled had forecast 215,000 claims in the latest week. Claims have been bouncing around in the 194,000-225,000 range this year.

8. Oil futures are on pace for a weekly loss as traders see limited risk that Israel’s retaliatory strike on Iran will trigger a wider war that disrupts crude supplies. U.S. crude oil and global benchmark Brent have fallen 3% and 3.4%, respectively, since last Friday, erasing gains made when investors bid up prices on fears that Israel and Iran were on the brink of major war. West Texas Intermediate futures were last trading 0.66% higher at $83.28 a barrel, while Brent gained 0.49% to $87.54 a barrel.

9. The Euro has gone back and forth during the week, and it looks like it continued to pay close attention to the 1.07 level as a potential resistance barrier. If it can break above there, then the market is likely to go higher, perhaps reaching towards the 50-week EMA. In general, it feels like that is an area that will be difficult to overcome.

10. The U.S. dollar continues to see a lot of upward pressure against the Japanese yen, as the interest rate differential continues to favor the greenback, especially on Wednesdays, when the swap is triple. USD/JPY whipsaws lower and then higher on alternating risk-on risk-off caused by Middle East tensions. Governor Ueda talks about defending the Yen from further weakness and currency-induced imported inflation. USD/JPY price chart shows bearish Hanging Man forming, boding ill for future price action.

An Air Canada worker and several others have been charged or sought in connection with what police officers are calling the biggest gold theft in Canadian history. The Ocean’s 11-esque heist occurred at Toronto Pearson International Airport this past year, and saw a gang make off with 20 kilograms of gold bars worth some $20million. Another $1.7million in foreign currency was also stolen, taken from a cargo plane that had just arrived from Zurich, Switzerland. Also recovered was the five-ton truck and a litany of smelting pots and molds, allegedly used to melt down the goods. Air Canada spokesman Peter Fitzpatrick told the media that two suspects individuals worked for the airline’s cargo division when the theft occurred. The heist was ranked as the sixth largest gold heist in the history of world crime – and is believed to be the largest gold heist in Canada, according to the National Post.

The dollar is headed for its biggest rally in over a year on expectations U.S. interest rates will stay high for longer and as investors pile into the haven currency amid escalating tensions in the Middle East. Traders are betting the Federal Reserve will only begin easing in September, compared with July a week ago. The repricing comes after a string of surprisingly strong inflation readings that are shaking up the prevailing narrative for markets and stoking volatility. For most of this year, the market had been betting major central banks including the European Central Bank and Bank of England would loosen policy in unison with the Fed. That kept moves subdued across currency markets, with gauges of implied price swings falling to multi-year lows. But with Fed policy on hold for longer while other central banks start to cut, global monetary cutting cycles have become “a little bit more higgledy-piggledy,” said Joe Little, chief global strategist at HSBC Asset Management. “This means that currency volatility could pick up a little bit more,” he said, adding that euro, sterling, and the yen could see the biggest rise in volatility among G-10 currencies in the coming months.

New home construction slowed last month as a leveling off in interest rates has given way to a lull in housing demand and caution among builders. Residential starts decreased 14.7% in March to a 1.32 million annualized rate, the lowest since August. The figure was weaker than all estimates in a survey of economists. Building permits, which point to future construction, fell to a 1.46 million rate in March. Both starts and permits were revised higher in February. Single-family home construction dropped by the most in about three years, while the pace of multifamily starts sank to lowest since the onset of the pandemic. Permits for both also fell. After ramping up construction in recent months, builders may be taking a breather. The inventory of new homes for sale is near the highest since 2008. The figures represent a blemish in the nation’s recovery in the housing market. Mortgage rates have largely stabilized around 7%, and prospective buyers and sellers are only slowly coming around to accept this as the new normal.

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. 12, 2024Apr. 19, 2024Net Change
Gold $2,356.33 $2,393.8237.491.59%
Silver $28.31 $28.690.381.34%
Platinum $987.40 $934.10-53.30-5.40%
Palladium $1,058.88 $1,021.24-37.64-3.55%

Previous Year Comparisons

Apr. 20, 2023Apr. 19, 2024Net Change
Gold $1,980.55 $2,393.82413.2720.87%
Silver $25.01 $28.693.6814.71%
Platinum $1,127.30 $934.10-193.20-17.14%
Palladium $1,606.75 $1,021.24-585.51-36.44%

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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