1. A crucial week of labor market data will greet investors during a holiday-shortened trading week that begins the month of July, the third quarter, and second half of 2024. With stocks sitting near record highs and recent inflation trends proving more positive, all eyes have turned to the labor market for signs of weakness as the Fed maintains its restrictive interest rate stance. The June Jobs report will provide a robust look at the labor market on Friday, while updates on private payrolls and job openings will also be in focus throughout the week. Updates on activity in the manufacturing and services sectors will also be scattered throughout the schedule. Constellation Brands is expected to be the focus of the lone notable corporate earnings report during an otherwise quiet week before big banks officially kick off second-quarter earnings season the following week. Markets in the US will close early on July 3 (1 p.m. ET) and will remain closed on July 4 for Independence Day.

The Precious Metals Week in Review – July 5th, 2024.
The Precious Metals Week in Review – July 5th, 2024.

2. Treasury yields dropped across the curve on Friday as data showed U.S. hiring moderated in June while the jobless rate rose to the highest since late 2021. Stocks hovered near all-time highs. Swaps currently project almost two Fed reductions in 2024, and bets have been building around a September start of the policy easing cycle. Nonfarm payrolls rose by 206,000 in June and job growth in the prior two months was revised down by 111,000. The median forecast in a survey of economists called for a 190,000 increase. The unemployment rate rose to 4.1%, and average hourly earnings cooled. U.S. 10-year yields fell seven basis points to 4.29%. Bitcoin sank on concerns about potential selling by governments, creditors of a failed exchange and beleaguered crypto miners. Gold and silver are surging. While the June jobs report topped expectations, other components within the data continued to highlight a softening labor market.

3. An alarming number of Americans are still unprepared for retirement. In a recent conversation Derek Ferguson, chief administration officer at TIAA, sounded the alarm that retirement savings numbers remain dismal, and even more so for marginalized and underbanked groups. Nearly 40% of Americans risk running out of money in retirement, he said, while 53% of African Americans will likely outlive their retirement savings. “If that system is broken, everything breaks down,” Ferguson said about saving for retirement. “These deficits are going to lead to a definite gap in how people retire.” A recent survey by Allianz found that concerns about running out of money have increased in recent years. “Running out of money in retirement is a scary thought,” said Kelly LaVigne, vice president of Consumer Insights at Allianz Life. “That’s why it is so important to have a thorough financial strategy for retirement.”

4. Oil climbed as traders took stock of mounting geopolitical risks in Europe and the Middle East as well as a hurricane in the Caribbean. West Texas Intermediate traded above $82 a barrel after advancing about 6% in June. Record-breaking Hurricane Beryl is intensifying as it churns through the Caribbean, threatening flooding rains and storm surge. Though experts say it’s unlikely that the storm will hit U.S. oil operations in the Gulf of Mexico, there’s still a chance of disruption later this week. Such a severe storm this early in the year may portend a serious hurricane season to come, which could halt offshore production or even disrupt refinery operations in the Gulf Coast and subsequently drive-up prices at the pump. OPEC+ has helped shore up prices by saying that any plan to add barrels back to the market will be dependent on market conditions. Money managers last week plowed cash back into US crude futures, while key spreads are in a bullish backwardation structure, indicating tight supplies. “It looks like we will be carrying a little of momentum into the third quarter with the backwardation elevated and hedge funds loading up on longs for a third consecutive week,” said Ole Hansen, head of commodities strategy at Saxo Bank AS. “OPEC+ supply increase, or not, as well as geopolitics, China and U.S. election potential key focus areas in the coming months.”

5. The national average on the 30-year, fixed-rate mortgage rose to 6.95% from 6.86% a week prior, Freddie Mac reported on Wednesday. The increase snaps a four-week streak of rate declines and pushes rates back to their level in mid-June. A year ago, the average rate on a 30-year, fixed-rate loan was 6.81% Freddie Mac said. Meanwhile, the average rate on a 15-year, fixed-rate mortgage also rose, climbing to 6.25% from 6.16%. A year ago, the average for 15-year, fixed-rate loans was 6.24%. With rates stuck at or near 7% for the past year, homeowners with lower-rate mortgages, which they took out during or before the COVID-19 pandemic, have been reluctant to list their homes. That has contributed to a housing inventory shortage, driving prices higher and helping to create affordability problems. The number of homes available for sale increased nearly 20% annually to 1.28 million in May, according to the National Association of Realtors. This rise marks the highest inventory level in almost three years. Month over month, inventory is up almost 7%. At the current existing home sales pace, it would take 3.7 months to sell all listed homes, according to the NAR. This is the slowest since 2020, indicating a market that is shifting toward buyers.

6. In the week ending June 29, the advance figure for seasonally adjusted initial claims was 238,000, an increase of 4,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 233,000 to 234,000. The 4-week moving average was 238,500, an increase of 2,250 from the previous week’s revised average. The previous week’s average was revised up by 250 from 236,000 to 236,250.

7. U.S. crude oil topped $84 per barrel on Friday, putting the benchmark on pace for a fourth straight weekly gain as falling inventories show an uptick in demand. Oil market analysts have been forecasting a tighter market in the third quarter as summer fuel demand picks up. U.S. inventory data appeared to confirm those forecasts, with crude stocks declining by 12.2 million barrels and gasoline falling by 2.2 million barrels last week. West Texas Intermediate is on pace for a 3.2% gain for the week, while Brent is ahead by 1.44%

8. EUR/USD loses traction but holds above 1.0800 after touching its highest level in three weeks above 1.0840. Nonfarm Payrolls in the U.S. rose more than expected in June but downward revisions to May and April don’t allow the USD to gather strength.

9. USD/JPY is falling hard toward 160.50 in Asian trading on Friday, having reversed from near 161.40. The pair drops on renewed U.S. Dollar weakness and Japanese verbal intervention, which rescues the Yen. The focus shifts to jobs report.

Based on historical trends and regular seasonal performance, precious metals may be significantly underpriced going into the second half of the year, according to precious metals strategists at MKS PAMP. In the company’s Precious Metals Seasonal Report released on July 3, the strategists wrote that a nuanced understanding of seasonal trends is important for metals investors. “Seasonal trends alone don’t form the foundation of any trade or view, but it’s usually a useful supplement to existing ideas and helps explain away price out/underperformances,” they wrote. “Given we’re entering 2H, and after the recent strong price performance across most metals in 1H’24, it’s worthwhile to provide a review of 1) how 1H 2024 performances stacked up against historical seasonal trends, and 2) provide a quick overview of the outlook for metals performances and how they ‘should perform’ into 2H and in this late summer (July 4th-Labor Day) period.” They said that on average, second-half performances are more bullish than first-half performances historically for Gold, Silver, Platinum, and Palladium. Average 2H metals performances are 6x larger than average 1H metals performances (data was largely boosted by historical Palladium outperformance in 2H since 2010). Statistically, gold prices posted average monthly gains of 2% in the first half of 2024 against a historical expectation of a 0.5% gain per month. Silver rallied 3.6% on average per month in 1H (vs historical past average gains of +0.2%); Platinum rallied +0.3%/month in 1H’24 (vs -0.1% losses). Palladium fell a chunky -2.4% / month in 1H’24 where it should put in 0.3% gains.

Federal Reserve Chair Jerome Powell said Tuesday that he is encouraged by cooler inflation but reinforced that the central bank will need to see more evidence before cutting interest rates. The last two inflation readings in April and May “do suggest that we are getting back on a disinflationary path,” Powell said while speaking on a panel in Portugal for a European Central Bank conference. Powell’s comments come days after the latest reading of the Fed’s preferred inflation gauge — the “core” Personal Consumption Expenditures (PCE) index — rose 2.6% in May, in line with expectations and down from 2.8% in April. That marked the slowest annual gain in more than three years. On a month-over-month basis, the inflation measure rose 0.1%, also in line with expectations and down from 0.2% in April. The reading offered new support for rate cuts later this year, easing concerns that mounted during the first quarter that hotter-than-expected inflation could upend plans for a loosening of monetary policy in 2024. Despite another positive signal that inflation is easing, the central bank isn’t likely to cut rates at its next meeting in late July.

Economists and some Federal Reserve officials are increasingly on alert that pain could be on the horizon for American workers amid signs the labor market is losing steam. Companies are posting fewer job openings this year and employees are quitting less as unemployment has begun creeping up from low levels, signaling the end of the historically tight labor conditions that characterized the rapid recovery from the pandemic shock. “Any change in the outlook for the labor market could have significant implications for the direction of the economy and monetary policy,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “If there is one thing we know for sure, it is that conditions change very quickly.” Kelly Bonn, a recruiter and executive coach Florida, said inquiries from jobseekers asking for help are up about 30% since the end of 2023. Finding a job can often take two to five months now, compared to one or two months in 2021 and 2022, according to Bonn. Fed officials are still mostly sanguine about the state of the labor market, though they’ve begun to acknowledge rising risks. “You’re really getting to that place relative to job openings and hiring, which would mean higher unemployment as a result of further declines in job openings,” Fed Chair Jerome Powell said Tuesday. “You can’t know that with precision, but it’s very much understood by us that we have two-sided risks, and we have to manage them.”

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.28, 2024July. 5, 2024Net Change

Previous Year Comparisons

July. 7, 2023July. 5, 2024Net Change

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

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© 2024, Precious Metals International, Ltd.

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