1. U.S. stocks edged lower on Monday as investors braced for a Federal Reserve policy decision and key inflation data in the week ahead, with Nvidia and Apple events in immediate focus. Stocks are treading water after signs of strength in mixed May Non-Farm Payrolls report reinforced bets that the Fed will keep interest rates at a two-decade high for longer. Trader expectations for a cut in September have fallen, while those for November have risen, according to the CME FedWatch tool. Wall Street expects trading in Nvidia to be volatile in the wake of the 10-for-1 split as retail buyers flood in. Some strategists are calling the move a “generational opportunity.” Monday also brings the first day of Apple’s most highly anticipated developers conference in years, where CEO Tim Cook is expected to reveal a big push into AI (Artificial Intelligence) to catch up with rivals. Elsewhere, investors kept a watchful eye on potential fallout from political upsets in Europe. France’s President Macron called a snap national election after a trouncing from the far right in Sunday’s EU-wide vote, while Germany’s leader also suffered a crushing defeat. The euro slumped to its lowest level in a month, while the Paris stock index sank around 2%
2. A new wave of political pressure greeted Federal Reserve Chair Jerome Powell and his colleagues as they gathered in Washington this week to discuss the direction of interest rates. From the left, the commentary came in the form of two new letters from liberal lawmakers calling on Powell to immediately lower interest rates. One letter, led by Sen. Elizabeth Warren, concluded by telling the central banker, “You have kept interest rates too high for too long.” But the political noise may have a limited impact, at least for this week. It’s partly due to the limited leverage these politicians hold, but also largely by Powell’s own design. The central banker has long set “data driven” benchmarks (and tried to adhere closely to them) to avoid the fate of predecessors seen as too susceptible to changing political winds. Powell maintains that his sole focus is on things like a strong jobs report last week as well as another inflation print due Wednesday morning.
3. A one-two punch has knocked gold down to the canvas, but although prices have room to move lower, analysts have said that investors should view this correction as a strategic buying opportunity. Although gold continues to consolidate in a broad range, the precious metal is ending the week with volatility. Disappointing economic data helped push gold prices to initial resistance at $2,400 an ounce mid-week; however, that bullish momentum has proven unstainable as the market ended last Friday in negative territory, extending its losing streak to three weeks. August gold futures last traded at $2,325.60 an ounce, down more than 2% on the day. Meanwhile, the precious metal is down nearly 1% from last Friday. Silver is also being dragged lower, extending its losing streak to three consecutive weeks. July silver futures last traded at $29.46 an ounce. Although gold has suffered some significant blows, it is not down for the count. Christopher Vecchio, Head of Futures and Forex said the employment numbers were not as healthy as the market thinks. He pointed out that there was a massive discrepancy between the government numbers and the household survey. The government numbers show robust gains; however, the household survey showed job losses of 408,000. At the same time, there was a sharp drop in full-time positions and a rise in part-time employment. “The data reflects what we are seeing in other reports, that labor market growth is starting to slow,” Vecchio said. Michelle Schneider, director of Education and Research at MarketGauge, said that despite gold and silver’s selloff, there has been no fundamental change in the market. “We still have geopolitical uncertainty, we still have inflation, and we still have government debt and spending rising uncontrollably,” she said. “These are all factors that continue to support gold and silver.” Schneider added that for gold’s long-term bull market to end, world peace would have to break out, and inflation would have to fall back to 2%. “That seems a little far-fetched for me right now,” she said. Vecchio said that his year-end target remains $2,575 an ounce even with this pullback.
4. The Federal Reserve held interest rates at a 23-year high Wednesday while scaling back its estimate of rate cuts this year to one from three previously. The central bank voted to keep its benchmark interest rate in a range of 5.25%-5.50% at the conclusion of its two-day policy meeting. The fed funds rate has been in this range since July 2023. It was a close call on the revised median of rate cuts predicted for this year. Eight officials estimated two cuts this year, while seven officials predicted one cut. Four officials saw no cuts happening this year. At the same time Fed officials boosted their collective forecast for the number of cuts expected next year. They now see a median of 4 additional rate cuts happening in 2025. That is up from the prior forecast of 3.
5. Wholesale price increases fell in May, the latest sign that inflation pressures in the United States may be easing as the Federal Reserve considers a timetable for cutting interest rates. The Labor Department reported Thursday that its producer price index, which tracks inflation before it reaches consumers, declined 0.2% from April to May after rising 0.5% the month before, pulled down by a 7.1% drop in gasoline prices. Overall, it was the biggest drop in producer prices since October. Measured from a year earlier, wholesale prices were up 2.2% last month, edging down from a 2.3% increase in April. Excluding volatile food and energy prices, so-called core producer prices were unchanged from April and up 2.3% from May 2023. The producer price index can provide an early read on where consumer inflation is headed. Economists also watch it because some of its components, including some healthcare and financial services costs, are used to compile the Fed’s preferred inflation gauge, known as the personal consumption expenditures price index.
6. The number of Americans filing new claims for unemployment benefits increased to a 10-month high last week, pointing to easing labor market conditions. Initial claims for state unemployment benefits jumped 13,000 to a seasonally adjusted 242,000 for the week ended June 8, the highest level since last August, the Labor Department said on Thursday. Economists polled had forecast 225,000 claims in the latest week.
7. Oil prices fell on Friday but were on track for their first weekly gain in four weeks as markets assessed the impact of higher-for-longer U.S. interest rates versus solid outlooks for crude and fuel demand this year. Brent crude futures were down 72 cents, or 0.87%, to $82.04 a barrel at 0100 GMT. West Texas Intermediate (WTI) U.S. crude futures lost 79 cents, or 1%, to trade at $77.84 a barrel, reversing small gains in the previous session. In a see-saw week, oil prices rallied after the Organization of Petroleum Exporting Countries stuck to a forecast for relatively strong growth in global oil demand for 2024 and Goldman Sachs projected solid U.S. fuel demand this summer.
8. EUR/USD stays under bearish pressure and trades at its lowest level since early May below 1.0700. Unabated US Dollar demand amid risk aversion and looming EU political uncertainty exert downside pressure on the pair heading into the weekend.
9. USD/JPY has pared back gains to trade near 157.00 in the European trading hours on Friday. Broad risk aversion helps the Japanese Yen recover ground after falling hard on the Bank of Japan’s decision to hold the policy settings unchanged.
A closely watched report on U.S. inflation showed consumer price increases cooled during the month of May. The Consumer Price Index (CPI) remained flat over the previous month and rose 3.3% over the prior year in May — a deceleration from April’s 0.3% month-over-month increase and 3.4% annual gain in prices. Both measures came in lower than economist’s expectations. It was the lowest monthly headline reading since July 2022. A decline in energy prices, led by a drop in gas prices, contributed to further downward pressure on headline CPI. On a “core” basis, which strips out the more volatile costs of food and gas, prices in May climbed 0.2% over the prior month, the lowest monthly core reading since June 2023, and 3.4% over last year. Both measures were also cooler than April’s data and lower than economist estimates.
The U.S. Federal Reserve may have just ducked out of the presidential campaign spotlight with a fresh set of forecasts showing no interest rate cuts are likely until after Election Day. They also issued projections showing greater hesitance than before about starting reductions in high borrowing costs that have made it more costly for Americans to buy anything on credit from a washing machine to a car to a house – a dynamic that has contributed to consumers’ persistently poor view of the economy and Democratic President Joe Biden’s management of it. “This is obviously bad news for Joe Biden’s campaign, who’ve been desperately trying to convince voters that the economy is in good shape thanks to so-called Bidenomics,” Republican consultant Jeanette Hoffman said. To be sure, circumstances in the next couple of months could change sufficiently to warrant a cut by the Fed at its meeting in mid-September, seven weeks before the election.
U.S. home sales in May fell to among the lowest levels in the past decade, real estate brokerage Redfin said in a report, as both demand and supply remained sluggish in a high-mortgage rate environment. Housing affordability in the U.S. is at an all-time low. Median home prices have scaled record highs, and the 30-year fixed-mortgage rate is hovering at around 7%. This has depressed both demand and supply. The number of homes for sale remains roughly 25% below pre-pandemic levels, according to Redfin. In May, 407,959 homes were sold. Only October 2023 (398,537) and May 2020 (369,300) in the past decade have recorded fewer home sales than last month. Home sales fell 1.7% month-over-month in May on a seasonally adjusted basis and dropped 2.9% from a year earlier, while median home sale price rose to a record high of $439,716, up 1.6% month-over-month and 5.1% year-over-year.
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)
| June.7, 2024 | June.14, 2024 | Net Change | ||
| Gold | $2,305.73 | $2,333.99 | 28.26 | 1.23% |
| Silver | $29.27 | $29.49 | 0.22 | 0.75% |
| Platinum | $967.09 | $965.45 | -1.64 | -0.17% |
| Palladium | $914.72 | $896.93 | -17.79 | -1.94% |
| Dow | 38798.86 | 38591.49 | -207.37 | -0.53% |
Previous Year Comparisons
| Jun. 16, 2023 | June.14, 2024 | Net Change | ||
| Gold | $1,959.19 | $2,333.99 | 374.80 | 19.13% |
| Silver | $24.11 | $29.49 | 5.38 | 22.31% |
| Platinum | $986.82 | $965.45 | -21.37 | -2.17% |
| Palladium | $1,427.48 | $896.93 | -530.55 | -37.17% |
| Dow | 34310.19 | 38591.49 | 4281.30 | 12.48% |
Here are your Short-Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 2257/2221/2155 | 28.33/27.50/25.89 |
| Resistance | 2358/2423/2459 | 30.78/32.38/33.22 |
| Platinum | Palladium | |
| Support | 946/929/895 | 896/880/858 |
| Resistance | 997/1031/1048 | 933/954/970 |