1. U.S. stocks wavered from record highs on Friday as rate-cut euphoria faded, with FedEx earnings providing a reality check. The S&P 500 fell roughly 0.1% after the benchmark index ended at an all-time high. The Dow Jones Industrial Average climbed slightly higher on the heels of notching its own record close. Leading the way lower, the tech-heavy Nasdaq Composite dropped 0.2%. Stocks surged on Thursday as investors embraced Chairman Jerome Powell’s message that the Federal Reserve made a big interest rate cut to support the economy, not to save it — an idea bolstered by jobless claims data. That roaring rally is now sputtering amid reminders that risks to growth could still lie ahead. Wall Street is still wondering whether the Fed has fallen behind in keeping the economy on track for a “soft landing”. Also, those Fed-fueled high spirits are stoking the risk of a bubble, according to a top Bank of America strategist. Michael Hartnett said stocks are pricing in levels of policy easing and earnings growth right now that push investors to go chasing for gains.
2. In an historic week for the precious metals market, gold futures have shattered records, breaching the $2600 per troy ounce threshold for the first time. As of 5 PM last Friday, the most active December contract settled at $2606.20, marking a net gain of $19 or 0.73% for the day. This surge represents the second consecutive day of record-breaking highs, with the intraday peak reaching an unprecedented $2614.60. This week’s dramatic rise will undoubtedly be etched in financial history as the moment gold futures crossed the $2600 milestone. As the dust settles on this landmark event, market participants are now pivoting their attention to next week’s Federal Open Market Committee (FOMC) meeting. This gathering is poised to be one of the year’s most consequential, with widespread anticipation of the first interest rate cut since 2020. The consensus among analysts, economists, and market observers is that a rate reduction is all but certain. As the financial world holds its breath for the FOMC’s decision, the gold market’s recent performance serves as a barometer of economic uncertainty and anticipation.
3. BlackRock strategists turned underweight short-dated U.S. Treasuries from overweight, saying the extent of Federal Reserve interest-rate cuts the market is betting on is unlikely to pan out. Wei Li, the firm’s chief investment strategist, said speculation that the Fed waited too long to ease and will now be forced to cut at an accelerated pace to shore up the economy is misplaced. In an interview she said she expects the Fed will lower rates by 25 basis points on Wednesday. “We think markets are a bit excessive in pricing the depth of the rate-cut cycle,” Li said. “The cutting cycle is starting, but maybe not as deep as markets seem to be pricing.” The strategist favors Treasuries with intermediate maturities known as the belly of the curve, in the five- to 10-year range, because of the relatively high yields.
4. Gold might be hitting record highs, but silver is starting to turn investors’ heads once again. The metal, at once precious and industrial, has surged for four straight days, poking above $31 per ounce for the first time since July. While the 10% gain this week is already the best since the early pandemic days of August 2020 and is enough to secure a two-month high — investors likely have their sights set much higher. There are a few reasons why the second-place metal has potential. First, silver has slightly outperformed gold this year, but gold prices are still elevated with respect to silver on a historical basis when looking at the so-called gold-silver ratio. When the multiple of gold to silver reaches 80, many investors will look for buying opportunities in silver, betting that the ratio will revert to means. Currently, it stands at 84 but was above 90 only weeks ago as gold was surging. According to DataTrek’s Nicholas Colas, the historical average of the ratio since 1990 is 70, which means silver has room to run long-term versus gold. Technical analysis of silver prices also reveals long-term pent-up bullish potential, and the two looming peaks in silver’s history at about $50 per ounce could function as magnets for a breakout.
5. The number of Americans filing new applications for unemployment benefits unexpectedly fell last week, suggesting job growth picked up in September. Initial claims for state unemployment benefits dropped 12,000 last week to a seasonally adjusted 219,000 for the week ended Sept. 14, the Labor Department said on Thursday. Economists polled had forecast 230,000 claims for the latest week. The labor market has cooled considerably, with a big step-down in hiring and a decrease in job openings, which have raised concerns of a deterioration in conditions that could undermine the economic expansion.
6. Oil prices closed slightly lower Wednesday, snapping a two-day winning streak even after the Federal Reserve cut interest rates for the first time in years. The central bank slashed rates by a half point, a bigger move than many had expected. Though prices clawed back losses from earlier in the session, the response in the oil market was subdued. West Texas Intermediate October contract: $70.91 per barrel, down 28 cents, or 0.39%. Year to date, U.S. crude oil has fallen about 1%. Brent November contract: $73.65 per barrel, down 5 cents, or 0.07%. Year to date, the global benchmark has declined about 4%.
7. EUR/USD faces selling pressure above 1.1150 in Friday’s North American trading hours. The major currency pair drops as the dollar bounces back. The U.S. Dollar Index, which gauges the Greenback’s value against six major peers, recovers sharply to near 101.00. However, the broader outlook of the dollar remains uncertain, following the Fed’s bumper interest rate cut decision and increasing market expectations that the central bank will continue with an aggressive policy-easing cycle.
8. The USD/JPY delivers a sharp rally to nearly 144.00 in Friday’s European session. The asset strengthens as the Japanese Yen (JPY) weakens after the Bank of Japan’s (BoJ) monetary policy announcement. The BoJ kept interest rates in the range of 0.15%-0.25%, as expected, but did not endorse the need for more hikes in the remaining year, which was widely anticipated by market participants.
The Federal Reserve slashed interest rates by a half percentage point Wednesday and charted a course for two additional cuts this year followed by four more in 2025. The action marks the Fed’s first easing of monetary policy since 2020 and the termination of its most aggressive inflation-fighting campaign since the 1980s. The decision came in a split vote at the conclusion of the Fed’s two-day policy meeting as officials cut the central bank’s benchmark rate by 50 basis points to a new range of 4.75%-5.0%. Rates had previously been held at a 23-year high since July 2023. Federal Reserve Governor Michelle Bowman said on Friday she dissented over the U.S. central bank’s half-percentage-point interest rate cut this week, favoring a quarter-percentage-point reduction instead, because inflation remains above the 2% target, and she worried the public would misinterpret the larger move as “a premature declaration of victory.”
Gold stands alone in the entire commodity sector, according to analysts at Societe Generale, and the yellow metal now represents 100% of their commodity allocation. “Buoyed by geopolitical uncertainty and a moderating inflation environment in the U.S., as well as a potential convergence of fiscal costs whoever wins the presidential election, gold has continued its march higher since our analysts’ last quarterly,” analysts noted in the French bank’s latest commodities outlook. “The question now is where we go from here.” The analysts list “five major themes” that they believe are likely to drive gold markets: “geopolitics, the dollar and rates, central bank purchases, investor flows and fundamentals.” But they warn that while each of these drivers is “overwhelmingly positive” for gold prices, “there is a notable absence of unpriced drivers higher.” In their latest Q4 2024 Global Asset Allocation Outlook published on Sept. 12, Societe Generale showed that when it comes to their bullishness on the yellow metal, they’re putting their money where their mouth is: Gold now represents 100% of their commodity holdings and 7% of their total asset allocation, a 40% Q/Q increase.
Shares of major U.S. homebuilders surged in premarket trade on Thursday, buoyed by expectations of higher demand due to reduced borrowing costs after the Federal Reserve unveiled an oversized interest rate cut. The central bank on Wednesday kicked off an anticipated series of interest rate cuts with a larger-than-usual half-percentage-point reduction that is expected to further reduce mortgage rates in the coming months and help reduce incentives that builders need to offer to attract buyers. The lower cost of financing could also boost further homebuilding activity offsetting a chronic shortage of homes that has been a growing issue since the 2008 financial crisis. The average 30-year fixed rate mortgage rate recently declined to 6.20% according to Freddie Mac, from a high of nearly 8% months ago. 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)
| Sept. 13, 2024 | Sept. 20, 2024 | Net Change | ||
| Gold | $2,582.63 | $2,619.60 | 36.97 | 1.43% |
| Silver | $30.63 | $31.13 | 0.50 | 1.63% |
| Platinum | $1,001.60 | $979.30 | -22.30 | -2.23% |
| Palladium | $1,071.43 | $1,076.99 | 5.56 | 0.52% |
| Dow | 41393.85 | 42061.85 | 668.00 | 1.61% |
Previous Year Comparisons
| Sept. 22, 2023 | Sept. 20, 2024 | Net Change | ||
| Gold | $1,925.57 | $2,619.60 | 694.03 | 36.04% |
| Silver | $23.54 | $31.13 | 7.59 | 32.24% |
| Platinum | $930.67 | $979.30 | 48.63 | 5.23% |
| Palladium | $1,254.51 | $1,076.99 | -177.52 | -14.15% |
| Dow | 33963.91 | 42061.85 | 8097.94 | 23.84% |
Here are your Short-Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 2512/2448/2412 | 28.58/26.52/25.34 |
| Resistance | 2650/2713/2745 | 31.83/33.00/35.07 |
| Platinum | Palladium | |
| Support | 967/954/905 | 1044/1019/1002 |
| Resistance | 1008/1021/1035 | 1103/1128/1150 |