1. Minneapolis Fed president Neel Kashkari said Monday that it’s “likely” the central bank will make modest interest rate reductions in the coming quarters. Monetary policy, he said remains “overall restrictive” though how restrictive is unclear to him. The job market remains strong, he added, noting that recent data showed that a rapid weakening in that market doesn’t appear to be “imminent.” Thus it appears likely that further modest reductions in our policy rate will be appropriate in the coming quarters to achieve both sides of our mandate. On the Fed’s preferred core measure, which eliminates volatile food and energy prices, the index rose 3.3% compared with expectations of a 3.2% rise. That was up a tenth of a percent from August. A stronger-than-expected September jobs report is also strengthening the argument by hawks on the Fed’s interest rate setting committee that any future cuts should be gradual. The economy added 254,000 jobs last month, more than the 150,000 expected by economists. The unemployment rate also fell to 4.1% from 4.2% in August. Other colleagues on the Fed are arguing for gradual cuts as well.
2. Gold futures jumped to a new high of $2,706 per ounce during Thursday’s session, giving credence to bulls who claim the precious metal rally isn’t over. Spot gold also rose to a new high north of $2,690 per ounce. Year to date, gold is up more than 30%, beating out the S&P 500’s gain of 22% and making it one of the best-performing commodities of 2024. Central banks have boosted their reserves of gold in recent years, with buying in the first quarter of this year reaching a record high compared to the same period last year. The Federal Reserve’s recent pivot toward lower interest rates has helped accelerate the commodity’s gain in recent months, given it is a non-yield-bearing asset. Goldman Sachs analysts raised its price target on the precious metal from $2,700 to $2,900 per troy ounce for early 2025, noting its economists now look for faster declines in short-term interest rates in Western nations and China. Goldman analysts said the purchases of gold by central banks will remain “structurally elevated.”
3. Average investors may be on edge as U.S. stocks set record highs and America’s biggest financial gurus are sitting on the market’s sidelines. Last week, it was reported that Amazon’s Jeff Bezos and Mark Zuckerberg sold billions of dollars of their own company stock this year – even as the S&P 500 notched its best nine months on record. Even the Oracle of Omaha Warren Buffett slashed Berkshire Hathaway’s holdings of Apple and built up a massive store of $277 billion in cash. And it’s not just the heavy hitters who are passing on this market rally. The officers and directors of all U.S. companies, the ‘corporate insiders’ reported the lowest net buying of their respective firms’ shares in a decade according to InsiderSentiment.com. A finance professor told the Wall Street Journal last week that insiders are worried about a looming recession. “Insider trading is a very strong predictor of aggregate future stock returns,” said Nejat Seyhun, professor at the Ross School of Business at the University of Michigan. “The fact that they are below average suggests that the stock returns in the future will be below average as well.”
4. Mortgage rates rose for the third consecutive week, prompting fewer homebuyers and refinancers to move forward with transactions. The average 30-year fixed-rate mortgage rose to 6.44% in the week through Wednesday, hitting the highest level since August, according to Freddie Mac data. A week earlier, it was 6.32%. Average 15-year mortgages jumped to 5.63%, from 5.41% a week earlier. Mortgage rates have been on the rise as markets adjust expectations about the size and pace of future Federal Reserve rate cuts. The recent upticks have curtailed refinancing activity and kept the pace of homebuying anemic. Applications to refinance a mortgage dropped 26% through Friday compared to a week earlier, according to the Mortgage Bankers Association. Even though average rates are still more than a percentage point lower than they were a year ago, many potential homebuyers are remaining cautious. Applications to purchase a home fell 7% week over week, though they remain around 7% higher compared to the same period a year ago.
5. The next decade could be “gruesome” for investors, warns Dave Collum, Professor of Organic Chemistry at Cornell University, who sees the market as overvalued by 150%, with the next big selloff triggering panic selling. “The economy is starting to roll over despite what some people say. All the indicators say that we are rolling over.” Collum takes issue with how inflation and GDP indicators are measured. “I think the numbers are dishonest. They’re not just inaccurate. We’ve long since passed the point where they’re trying to get it right,” he said. “The Fed’s entire purpose for being is to throw us out of equilibrium.” One key concern going forward is the growing U.S. national debt levels, which are approaching $36 trillion. “The federal government is growing its debt at 7% a year, which means we’re pulling consumption from the future forward. Why can’t they keep doing it? Because the dollar, at some point, is going to collapse. Then we’re going to give it all back. We will give it all back in a catastrophic correction,” he said. In addition to the rising debt levels, the accelerating de-dollarization trend threatens the U.S. dollar as a reserve currency. “If Russia is not buying our debt, China is not buying our debt, and Saudi Arabia stops buying our debt, there’s no one left to buy our debt. This means the Federal Reserve has to buy our debt, which means we’re monetizing debt, which means the dollar will get smacked,” he added. On top of that, BRICS member countries have stepped up their gold reserve purchases, with 2024 levels remaining near record levels. Collum also pointed out that some gold purchases are likely going unreported. “Let’s say China has 87,000 tons of gold, as some people speculate. China could offer gold certificates. What would be the consequences of such a move? It’s quite possible that it would destroy the dollar immediately,” Collum stated.
6. The number of Americans filing for unemployment benefits last week came back down to more recent ranges after a big jump the week before due to hurricanes in the Southeast. The Labor Department reported Thursday that applications for jobless claims fell by 19,000 to 241,000 for the week of Oct. 12. That’s well below the 262,000 analysts were expecting. The four-week average of claims, which evens out some of the weekly volatility, rose by 4,750 to 236,250. The total number of Americans collecting jobless benefits rose by 9,000 to about 1.87 million for the week of Oct. 5, the most since late July.
7. Oil fell, headed for its first weekly decline this month, as the U.S. revived a push to end the conflict in the Middle East and China’s crude demand slipped. West Texas Intermediate slid more than 2% to trade below $69 a barrel while Brent retreated below $73 a barrel. Recent data from China showed apparent oil demand fell from a year earlier, even amid tentative signs of economic improvement in the world’s second-biggest economy and the world’s largest crude importer.
8. EUR/USD recovers to near 1.0850 on Friday after posting a fresh 10-week low of 1.0800 on Thursday. The outlook of the major currency pair remains bearish as the Euro could face selling pressures on expectations that more interest rate cuts from the European Central Bank are in the pipeline. The ECB reduced its Rate on Deposit Facility by 25 basis points to 3.25% on Thursday. This was the second straight interest rate cut by the ECB and the third of this year.
9. The USD/JPY pair faces selling pressure near the psychological resistance of 150.00 in Friday’s North American session. The asset drops as the three-week rally in the Dollar’s rally appears to have halted, however, its outlook remains upbeat. The U.S. Dollar Index, which tracks the Greenback’s value against six major currencies, declines from the 10-week high of 103.90 to near 103.50.
U.S. retail sales increased slightly more than expected in September, supporting views that the economy maintained a strong pace of growth in the third quarter. Retail sales rose 0.4% last month after an unrevised 0.1% gain in August, the Commerce Department’s Census Bureau said on Thursday. Economists polled had forecast retail sales, which are mostly goods and are not adjusted for inflation, would rise 0.3%. Signs of the economy’s resilience likely will not discourage the Federal Reserve from cutting interest rates again next month but will cement expectations for a smaller 25-basis-point reduction in borrowing costs. Growth estimates for the third quarter are around a 3.2% annualized rate. The economy grew at a 3.0% pace in the second quarter.
Homebuilders are feeling more confident about the housing market despite a recent sharp rise in mortgage rates. The National Association of Home Builders/Wells Fargo Housing Market Index rose two points to 43 in October from the previous month, marking the second consecutive monthly gain. October’s reading was higher than economists’ estimates of 42. Still, any reading under 50 indicates more builders view conditions as poor rather than good. Today, mortgage rates are down more than a percentage point from this time last year when rates were hovering near 8%. The NAHB survey also showed more builders offered concessions in October. The survey found that 62% of builders used some sort of sales incentive to close the deal, up from 61% in September. Meanwhile, 32% of builders cut home prices to bolster sales in October, similar to last month. The average price reduction was 6%, up from 5% last month.
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)
| Oct. 11, 2024 | Oct. 18, 2024 | Net Change | ||
| Gold | $2,659.64 | $2,716.06 | 56.42 | 2.12% |
| Silver | $31.57 | $33.10 | 1.53 | 4.85% |
| Platinum | $986.84 | $1,014.78 | 27.94 | 2.83% |
| Palladium | $1,068.68 | $1,085.42 | 16.74 | 1.57% |
| Dow | 42863.86 | 43275.78 | 411.92 | 0.96% |
Previous Year Comparisons
| Oct. 20, 2023 | Oct. 18, 2024 | Net Change | ||
| Gold | $1,982.23 | $2,716.06 | 733.83 | 37.02% |
| Silver | $23.39 | $33.10 | 9.71 | 41.51% |
| Platinum | $900.94 | $1,014.78 | 113.84 | 12.64% |
| Palladium | $1,110.36 | $1,085.42 | -24.94 | -2.25% |
| Dow | 33126.42 | 43275.78 | 10149.36 | 30.64% |
Here are your Short-Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 2640/2619/2583 | 31.10/30.52/28.30 |
| Resistance | 2734/2750/2805 | 33.36/35.57/38.42 |
| Platinum | Palladium | |
| Support | 981/973/961 | 1073/1055/1042 |
| Resistance | 1021/1042/1100 | 1086/1103/1116 |