1. Gold’s record-high prices, combined with growing economic uncertainty and market volatility, are bringing a new focus to the precious metal’s role within global financial markets. Ahead of the Global Precious Metals Conference in October, the London Bullion Market Association continues to advocate that gold should be considered a High-Quality Liquid Asset (HQLA) within the modern financial landscape. In a recent interview, Ruth Crowell, Chief Executive Officer of the LBMA, said the association continues to make progress in its efforts to recognize gold as a HQLA. “There’s been a huge amount of focus on the U.S. banking crisis last year, in terms of there not being enough HQLA out there. Looking ahead, how do we ensure the system remains resilient?” she said. “We now have data from both the COVID crisis as well as the banking crisis showing how well gold performed as a high-quality liquid asset, operating very similarly, both in terms of volume and price, as U.S. treasuries.” In this year’s rally, gold has established that it can compete as a global currency. With the latest push above $2,500 an ounce, gold prices are up more than 20% against the dollar, euro, and British pound. Year-to-date, gold is up roughly 17% against the S&P 500.
2. Homebuying in the United States has recently slowed to a crawl, but falling mortgage rates could soon jolt it back to life. For potential homebuyers who may have been itching to come off the sidelines, the recent drop-in mortgage rates may be a double-edged sword. Lower rates could give homebuyers more purchasing power. However, they could also lead to more intense competition for homes on the market, driving record-high home prices even higher. “It’s one of those things where you should be careful what you wish for,” said Greg McBride, the chief financial analyst at Bankrate. “A further drop in mortgage rates could bring a surge of demand that makes it tougher to actually buy a house.” According to Freddie Mac, the average 30-year fixed mortgage rate fell to 6.46% last week, the lowest level in more than a year and down significantly from last year’s peak of 7.79%. There is a growing consensus that the Fed will begin cutting interest rates next month, and while the central bank doesn’t directly set mortgage rates, its actions influence borrowing costs throughout the economy. More homebuyers are already acting: Existing home sales rose 1.3% in July, snapping four straight months of sales declines, according to the National Association of Realtors.
3. Exxon Mobil said on Monday it expects crude demand to stay above 100 million barrels per day through 2050, similar to today’s levels, a forecast 25% higher than top European rival BP. The stronger demand projected by the largest U.S. oil company in its latest global oil outlook underpins Exxon’s production growth plans, the most ambitious among Western oil majors. Exxon plans to pump 4.3 million barrels of oil and gas per day this year, 30% more than their top rival Chevron’s current output. BP is cutting production to about 2 million barrels per day by 2030. “Oil and gas demand have a very, very long runway and will continue to grow over the next few years,” Exxon Energy and Strategic Planning Director Chris Birdsall said recently. Exxon estimates electric vehicles will not significantly alter long-term global oil demand, as the world’s population is expected to increase from 8 billion today to nearly 10 billion in 2050, adding to demand for energy. If every new car sold in the world in 2035 were electric, crude oil demand would still be 85 million bpd, the same as it was in 2010. Exxon projects 67% of the global energy mix in 2050 will be supplied by oil, natural gas and coal, down from 68% last year.
4. The scrutiny of how banks and brokerages treated their customers during an era of high interest rates is heating up just as that era ends. Raymond James and JPMorgan Chase were hit with lawsuits in recent days by customers alleging they were shortchanged on the interest due from idle cash. They are the latest of several such suits against wealth advisory units and brokers centered on the use of so-called cash sweep accounts that typically don’t pay much interest. Other cases target Wells Fargo, Morgan Stanley, UBS, Ameriprise, and LPL Financial. The complaints come at a time when the Federal Reserve still has its benchmark rate at 5.25% to 5.5%, a 23-year high. The central bank is expected to start cutting rates as early as next month, kicking off an easing cycle that could last into 2025 and 2026. Regulators from the Securities and Exchange Commission are separately conducting investigations or inquiries of cash sweep practices at Wells Fargo and Morgan Stanley, according to recent filings from those banks, with Wells Fargo saying it was in “resolution discussions.”
5. The latest reading of the Fed’s preferred inflation gauge showed prices increased at a pace in line with Wall Street’s expectations in July. The core Personal Consumption Expenditures (PCE) index, which strips out the cost of food and energy and is closely watched by the Federal Reserve, rose 0.2 % from the prior month during July, in line with Wall Street’s expectations for 0.2% and the 0.2% reading seen in June. Over the previous year, prices rose 2.6% in July, matching June’s annual increase and below analyst expectations for a 2.7% increase. Economists have reasoned that while inflation’s decline remains paramount for the Fed when considering cutting interest rates, concerns about the labor market deteriorating have also come into focus. Oxford Economics chief economist Ryan Sweet said it puts a “smaller weight” on monthly inflation releases. “It’s not going to be a smooth, easy ride,” Sweet said on Aug. 23. “There’s going to be bumps along the road with the inflation numbers.” Still, Sweet noted the Fed’s preferred inflation gauge is still within “spitting distance” of the Fed’s target.
6. In the week ending August 24, the advance figure for seasonally adjusted initial claims was 231,000, a decrease of 2,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 232,000 to 233,000. The 4-week moving average was 231,500, a decrease of 4,750 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 futures rose nearly 2% on Thursday, rebounding after a two-day losing streak as Libya confirmed major disruptions in its oil output. Production in Libya has fallen by 1.5 million barrels over the past three days for a total loss of $120 million, according to the OPEC. Meanwhile, Iraq plans to reduce oil output from 4.25 million bpd in July to about 3.9 million bpd in September, a source said. West Texas Intermediate October contract: $75.91 per barrel, up $1.39, or 1.87%. Year to date, U.S. crude oil has gained 5.9%. Brent October contract: $79.94 per barrel, up $1.29, or 1.64%. Year to date, the global benchmark is ahead 3.7%.
8. The Euro initially tried to break above the 1.12 level for the week, only to fall apart and start falling again. The market is likely to continue to be very noisy. We have a situation where we are going to continue to see a lot of volatility. But if we break down from here, the next level would be the 1.10 level. After all, this is a market that seems to go from one large figure to the next. And that seemingly won’t be changing anytime soon, as it seems like it is somewhat “stuck” in a repeated pattern.
9. USD/JPY remains under pressure below 145.00 in Asian trading on Friday, The Japanese Yen is underpinned by hot Tokyo annual CPI data, which fans hawkish BoJ expectations. The pair’s downside, however, is cushioned by the recent U.S. Dollar strength and a better mood.
Gold futures have been surfing record highs, with Monday’s prices hitting $2,555.2 per ounce, sending the value of a 400 troy ounce gold bar to $1,022,080. The yellow metal has forged meteoric gains this year, emerging as the world’s second best-performing asset next to crypto. Its 23% year-to-date gain edges out the megacap-loaded Nasdaq Composite, itself up a healthy 18%. According to BofA Global Research, gold funds just absorbed the largest inflows in four weeks, attracting $1.1 billion. Central banks, especially those of developing countries, have been buying the so-called ‘barbarous relic’ at a record clip. According to the World Gold Council, central banks have bought 290 tons in the first quarter alone, beating out the prior Q1 record from 2023 and setting Central Banks on a path to record gold purchases in 2024 that are estimated to easily eclipse 1,000 tons. The central bank buying spree has solidified gold’s status as a reserve asset. Gold has now surpassed the euro to become the world’s largest reserve asset second only to the U.S. dollar, representing 16% of the reserve pool. The precious metal’s performance can be attributed to its unique position as a real asset with one of the lowest correlations to stocks across asset classes, making it a safe haven from market swings and inflation.
The interest rate for the most popular U.S. home loan slid to its lowest in 16 months, after Federal Reserve Chairman Jerome Powell signaled the central bank was ready to lower borrowing costs next month to keep the job market from weakening further. The average contract rate on a 30-year fixed-rate mortgage fell 6 basis points in the week ended Aug. 23, to 6.44%. That was the lowest since April 2023. The decline in mortgage rates, by 38 basis points in four weeks, has kept refinancing applications elevated, as homeowners who bought when rates were even higher moved to lock in lower monthly payments. The MBA 30-year average rate peaked at 7.9% last October. Mortgage applications and purchase applications edged up just 0.5% and 1% respectively, as would-be homebuyers hold out for a further drop in rates. Interest-rate futures reflect bets the Fed will cut short-term rates by a full percentage point by the end of this year.
It hasn’t been a great time for folks in the business of predicting recessions. The Conference Board’s Leading Economic Index signaled a recession in 2022. The highly regarded inverted yield curve recession indicator has been activated since November 2022. Even the commonly accepted layperson’s definition of recession, two negative quarters of GDP occurred in 2022. Most recently, the Sahm Rule, which measures short-term rises in unemployment, triggered its recession red flag in early August. “It’s really hard to read the economy right now,” said Claudia Sahm, who worked as an economist for the Fed and now serves as the chief economist at New Century Advisors. Sahm’s rule is the perfect example of why there’s rarely ever a clear read on economic data. It’s a rather simple math equation: If the three-month average of the national unemployment rate has risen 0.5% or more from the previous 12-month low, the rule triggers. This was triggered after the latest monthly jobs report in Aug. People make the incorrect inference that this is like a perfect indicator. And it’s true that in the past, it’s been perfect, but that doesn’t mean that it will be perfect in the future. Indeed, it’s extremely unlikely that it will not have a false signal. And often, just looking at the data might not reveal some of the alarming signs under the surface when heading into a recession.
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. 23, 2024 | Aug. 30, 2024 | Net Change | ||
| Gold | $2,510.97 | $2,499.78 | -11.19 | -0.45% |
| Silver | $29.79 | $28.82 | -0.97 | -3.26% |
| Platinum | $962.58 | $928.60 | -33.98 | -3.53% |
| Palladium | $963.90 | $968.60 | 4.70 | 0.49% |
| Dow | 41174.89 | 41562.95 | 388.06 | 0.94% |
Month End to Month End Close
| July. 31, 2024 | Aug. 30, 2024 | Net Change | ||
| Gold | $2,426.73 | $2,499.78 | 73.05 | 3.01% |
| Silver | $28.70 | $28.82 | 0.12 | 0.42% |
| Platinum | $975.05 | $928.60 | -46.45 | -4.76% |
| Palladium | $931.60 | $968.60 | 37.00 | 3.97% |
| Dow | 40842.79 | 41562.95 | 720.16 | 1.76% |
Previous Year Comparisons
| Sept. 1, 2023 | Aug. 30, 2024 | Net Change | ||
| Gold | $1,941.25 | $2,499.78 | 558.53 | 28.77% |
| Silver | $24.21 | $28.82 | 4.61 | 19.04% |
| Platinum | $966.15 | $928.60 | -37.55 | -3.89% |
| Palladium | $1,233.90 | $968.60 | -265.30 | -21.50% |
| Dow | 34841.57 | 41562.95 | 6721.38 | 19.29% |
Here are your Short-Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 2477/2443/2416 | 28.50/28.24/27.76 |
| Resistance | 2539/2566/2600 | 30.29/30.77/31.56 |
| Platinum | Palladium | |
| Support | 921/900/876 | 938/914/900 |
| Resistance | 973/983/999 | 976/991/1015 |