1. Federal Reserve Chair Jerome Powell and his central bank colleagues face a very different dilemma than a year ago as they gather later this week for their annual economic symposium in Jackson Hole, Wyo. Last August the main question was how long rates would need to stay at two-decade highs to cool inflation. This year, as inflation shows new signs of cooling and the job market slows, the question isn’t whether the central bank will cut rates in September, but by how much. He made it clear during a July 31 press conference that a 25-basis point cut was possible next month, but downplayed the idea of doing something bigger, such as 50 basis points. “We think that the time is approaching and if we do get the data that we hope we get, then a reduction in our policy rate could be on the table at the September meeting,” he said.
2. Gold prices are solidly up and hit another record high in early U.S. trading Tuesday. December Comex gold futures notched a record high of $2,564.60. Silver prices are also on the march higher and hit a four-week high overnight. Bullish charts and safe-haven demand, especially from China, are pushing the precious metals markets higher. Broker SP Angel said this morning in an email: “Chinese exporters and traders have been seen rushing to buy yuan and probably gold in anticipation of further U.S. dollar weakness. The metal has also been buoyed by Chinese buying after China’s central bank cracked down on local government bond buying. Troubles in the Chinese property sector have caused gold to become a preferred instrument for individual savings in China.” Also supporting gold are still lingering concerns about an Iranian military strike against Israel. However, it’s possible an Israeli-Hamas ceasefire agreement is close at hand. That could change Iran’s calculus on attacking Israel following recent Israeli assassinations of Hamas and Hezbollah officials.
3. Goldman Sachs has lowered the odds of the United States slipping into a recession in the next 12 months to 20% from 25% following the latest weekly jobless claims and retail sales reports. Earlier this month, the brokerage raised the odds of a U.S. recession from 15% after the unemployment rate jumped to a three-year high in July, sparking fears of a downturn. “We have now shaved our probability from 25% to 20%, mainly because the data for July and early August released since August 2 shows no sign of recession,” Goldman Sachs chief U.S. economist Jan Hatzius said in a note on Saturday. “Continued expansion would make the U.S. look more similar to other G10 economies, where the Sahm rule has held less than 70% of the time,” he added. He maintains the Federal Reserve will cut interest rates by 25 basis points at its September meeting but did not rule out a 50-bps cut if the jobs report falls short of expectations.
4. U.S. job growth in the year through March was likely far less robust than initially estimated, which risks fueling concerns that the Federal Reserve is falling further behind the curve to lower interest rates. Goldman Sachs and Wells Fargo economists expect the government’s preliminary benchmark revisions on Wednesday to show payroll growth in the year through March was at least 600,000 weaker than currently estimated — about 50,000 a month. There are several caveats in the preliminary figure, but a downward revision to employment of over 501,000 would be the largest in 15 years and suggests the labor market has been cooling for longer, and perhaps more so, than originally thought. The final numbers are due early next year. Such figures also have the potential of shaping the tone of Fed Chair Jerome Powell’s speech at week’s end in Jackson Hole, Wyoming. Investors are trying to gain insight as to when and how much the central bank will start lowering interest rates as inflation and the job market cool.
5. BlackRock has reduced its support for shareholder proposals on environmental and social issues for a third straight year, arguing that many of the efforts lacked merit and harmed long-term financial interests while doing little to improve companies. The world’s biggest asset manager backed 4% of 493 such proposals in the 12 months through June. That’s down from 7% a year earlier and more than 20% in the same period through mid-2022. BlackRock said shareholder proposals overall face considerable opposition because they’re of “poor quality or unconnected to how a company delivers long-term shareholder value.” Many proposals are filed by advocacy organizations targeting U.S. companies regardless of the specifics, BlackRock said. “Investors found the majority of these proposals to be overly prescriptive, lacking economic merit, or asking companies to address material risks they are already managing,” Joud Abdel Majeid, global head of investment stewardship, wrote in the report, referring to social and environmental proposals. Money managers across the industry reduced their support for environmental and social resolutions in the past year, including those pushed by anti-ESG campaigns. Average support for the resolutions fell to 16% in the most recent proxy year from 19% in the prior year, according to Morningstar Inc.
6. The number of Americans filing new applications for unemployment benefits rose in the latest week, but the level still suggested a gradual cooling of the labor market remains intact. Initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 232,000 for the week ended Aug. 17, the Labor Department said on Thursday. Economists polled had forecast 230,000 claims for the latest week. The latest data should continue to allay fears that the labor market is rapidly deteriorating, first raised after a much sharper than expected slowdown in job gains in July, which also saw the unemployment rate rise to a post-pandemic high of 4.3%.
7. U.S. crude oil futures rose nearly 2% on Friday as the Federal Reserve indicated interest rate cuts are coming, but prices are on pace for a weekly loss as slowing demand in China weighs on the market. Oil prices are still down for the week, with the benchmark falling 3% and the global benchmark Brent pulling back 1.6%. West Texas Intermediate October contract: $74.28 per barrel, up $1.27. U.S. crude oil has gained 3.6%. Brent October contract: $78.37 per barrel, up $1.25, or 1.5%.
8. The EUR/USD rallied sharply after hitting a daily low of 1.1105 after Federal Reserve Chairman Jerome Powell said, “The time has come for policy to adjust,” opening the door to ease policy. Therefore, the major jumped toward 1.1170 and posted gains of over 0.54%.
9. USD/JPY remains under heavy selling pressure near 145.50 in Friday’s Asian trading. The Japanese Yen got a fresh boost from the domestic inflation data and BoJ Governor Ueda’s willingness to hike rates further. The U.S. Dollar slips ahead of Fed Chair Powell’s speech.
The U.S. economy employed 818,000 fewer people than originally reported as of March 2024, showing the labor market may have been cooling long before initially thought. The revisions are a yearly practice from the Bureau of Labor Statistics; final revised numbers are expected to be released early next year. The report, released Wednesday morning, showed the largest downward revisions to the professional and business services industry, where employment was revised down by 358,000 during the period. Leisure & hospitality saw the second-largest downward revision of 150,000. The report lowers the monthly job additions seen in the economy over the time period to 174,000 from 242,000.
More Americans are looking for jobs and unemployment worries are at their highest level in a decade, according to a new survey released by the Federal Reserve Bank of New York. According to the NY Fed, the average expected likelihood of becoming unemployed in the next four months reached 4.4% in July, the highest in the survey’s 10-year history. This compared to 3.9% a year ago. The expected likelihood of moving to a new employer also increased, rising to 11.6% last month from the 10.6% seen in July 2023. More respondents are also actively on the job hunt, with 28.4% saying they’ve been searching for a new job over the past four weeks, the highest level since March 2014 and an increase from 19.4% in July 2023. The survey, which also noted decreased satisfaction with wage compensation, non-wage benefits, and promotion opportunities at respondents’ current jobs, comes as the Federal Reserve weighs recent labor market weakness with the unemployment rate now at 4.3%.
Sales of new U.S. single-family homes rose to their highest level in more than a year in July as a drop in mortgage rates boosted demand, offering more evidence that the housing market is recovering. New home sales jumped 10.6% to a seasonally adjusted annual rate of 739,000 units last month, the highest level since May 2023, the Commerce Department’s Census Bureau said on Friday. It was also the sharpest increase in sales since August 2022. The sales pace for June was revised higher to 668,000 units from a previously reported 617,000 units. The average rate on a 30-year fixed-rate mortgage was 6.46% this week, the lowest since May 2023, and more than half a percentage point lower than the same time last year, data from mortgage finance agency Freddie Mac showed.
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)
| Aug. 16, 2024 | Aug. 23, 2024 | Net Change | ||
| Gold | $2,499.00 | $2,510.97 | 11.97 | 0.48% |
| Silver | $28.81 | $29.79 | 0.98 | 3.40% |
| Platinum | $955.15 | $962.58 | 7.43 | 0.78% |
| Palladium | $949.30 | $963.90 | 14.60 | 1.54% |
| Dow | 40662.46 | 41174.89 | 512.43 | 1.26% |
Previous Year Comparisons
| Aug. 25, 2023 | Aug. 23, 2024 | Net Change | ||
| Gold | $1,912.33 | $2,510.97 | 598.64 | 31.30% |
| Silver | $24.21 | $29.79 | 5.58 | 23.05% |
| Platinum | $948.46 | $962.58 | 14.12 | 1.49% |
| Palladium | $1,232.39 | $963.90 | -268.49 | -21.79% |
| Dow | 34346.96 | 41174.89 | 6827.93 | 19.88% |
Here are your Short-Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 2450/2394/2364 | 27.77/26.54/25.90 |
| Resistance | 2536/2566/2622 | 30.28/31.52/32.10 |
| Platinum | Palladium | |
| Support | 943/932/924 | 937/923/913 |
| Resistance | 963/972/983 | 970/983/1005 |