1. The holidays are here. But many investors may be feeling like they made it onto the naughty list as turmoil in Washington and newfound political power turn to a souring outlook on the Fed’s interest rate policy, with fewer cuts expected to come next year. Markets gained ground on the final trading day last week. But it wasn’t enough to overcome the double whammy of the threat of a government shutdown and hawkish signals from the Federal Reserve, which appears newly concerned about persistent inflation in the months ahead. In the past week, the Dow Jones Industrial Average broke a 10-day losing streak but recorded a loss of 2.3% for the week. The Nasdaq Composite shed 1.8%, while the S&P 500 fell 2%. After a dramatic week, investors are set to receive a relative trickle of economic news. Markets close early on Tuesday and won’t reopen until Thursday. But the holiday-shortened week will still give Wall Street a chance to parse through the Fed’s expectations for next year’s interest rate decisions. Central bankers now predict a shallower rate-cutting path in 2025. A renewed “higher for longer” policy approach will hang over the final trading days of the year.
2. Bond traders have rarely suffered so much from a Federal Reserve easing cycle. Now they fear 2025 threatens more of the same. U.S. 10-year yields have climbed more than three-quarters of a percentage point since central bankers started slashing benchmark interest rates in September. It’s a counterintuitive, loss-inducing response, marking the biggest jump in the first three months of a rate-cutting cycle since 1989. Yields were higher on Monday, with the benchmark 10-year rate up about two basis points to 4.54%. Rising yields underscore how unique this economic and monetary cycle has been. Despite elevated borrowing costs, a resilient economy has kept inflation stubbornly above the Fed’s target, forcing traders to unwind bets for aggressive cuts and abandon hopes for a broad-based rally in bonds. After a year of sharp ups and downs, traders are now staring down another year of disappointment, with Treasuries as a whole barely breaking even. “The Fed has entered a new phase of monetary policy — the pause phase,” said Jack McIntyre, portfolio manager at Brandywine Global Investment Management. “The longer it persists, the more likely the markets will have to equally price a rate hike versus a rate cut. Policy uncertainty will make for more volatile financial markets in 2025.”
3. American consumers are feeling less confident in December, a business research group says. The Conference Board said Monday that its consumer confidence index fell back in December to 104.7 from 112.8 in November. Analysts forecast a rise to a reading of 113.8. Consumers had been feeling increasingly confident in recent months. The consumer confidence index measures both Americans’ assessment of current economic conditions and their outlook for the next six months. The measure of Americans’ short-term expectations for income, business and the job market tumbled more than a dozen points to 81.1. The Conference Board says a reading under 80 can signal a potential recession in the near future. The board reported Monday that consumers’ view of current conditions ticked down just more than a point to a reading of 140.2.
4. Emerging-market stocks rose Tuesday, with the main equities gauge making a final push for the year on the back of an Asian tech rally and signs that China is gearing up to unleash more stimulus. MSCI’s benchmark EM equity index rose for a second day in thin trading ahead of the holidays, buoyed by a 1% advance in Chinese stocks. While it’s headed for a total return of around 9%, it still has significantly underperformed developed market stocks, which have returned more than 20% so far this year. MSCI’s gauge for emerging currencies dipped for a second session. The index hovered around the lowest level since August and is headed to a 0.5% loss this year. Meantime, sovereign and corporate dollar bonds from emerging markets have returned about 7% in 2024.
5. Natural-gas investors are looking ahead to potential growth after a year in which historically low prices dinged profits and drilling plans. At the same time, the administration questioned the benefits of making the U.S. liquefied-natural-gas-export machine, the world’s biggest—even bigger. The U.S. natural-gas market has been constrained in recent years by aversions to new pipelines and an arduous permitting process that Washington has tried and failed to overhaul. But Wall Street is betting that more immediate change will be better prospects for future LNG facilities, where skyscraper-size tankers load up on supercooled supplies en route to power plants and factories abroad. Already the world’s largest LNG exporter, the U.S. is set to debut projects that are expected to begin to ship gas in earnest next year, with more scheduled to open by 2028. American LNG is well-suited to replace the Russian gas that Europe still imports.
6. The number of Americans applying for unemployment benefits held steady last week, though continuing claims rose to the highest level in three years. Jobless claim applications ticked down by 1,000 to 219,000 for the week of Dec. 21, the Labor Department reported Thursday. That’s fewer than the 223,000 analysts forecast. Continuing claims, the total number of Americans collecting jobless benefits, climbed by 46,000 to 1.91 million for the week of Dec. 14. That’s more than analysts projected and the most since the week of Nov. 13, 2021, when the labor market was still recovering from the COVID-19 jobs wipeout in the spring of 2020.
7. Brent crude oil futures rose above $73 per barrel on Friday, poised for a modest weekly gain amid light year-end trading. Oil gained traction after China announced additional economic measures, including reports that officials have greater flexibility to use government bond proceeds to stimulate growth, potentially boosting demand from the top consumer. The WTI crude oil market had a positive week again, as it looks like we are in the midst of trying to form some type of basing pattern. It’s also worth noting that the $65 underneath has been massive support for several years.
8. The EUR/USD pair fell 0.15% today to $1.0405, with a session-high at $1.0426. The pair closed up 0.3% on Thursday, the first profit in three days amid thin holiday trading. The Euro is down 0.25% so far this week against the dollar, heading for the fourth weekly loss in a row.
9. After essentially moving in lockstep with U.S. yields early in 2024, the strong relationship abruptly disintegrated mid-year. During this period, USD/JPY was more correlated with riskier asset classes such as stocks, suggesting carry trade flows were pushing the pair higher. Declining U.S. yields were ignored as USD/JPY rose, but as the BoJ continued to lift rates and economic growth faltered, it sparked an aggressive USD/JPY unwind.
Gold rose in thin U.S. holiday trading as investors digesting mixed domestic jobs data while mulling the outlook for Federal Reserve interest-rate moves. Recurring applications for U.S. unemployment benefits rose to the highest in more than three years, adding to signs that it’s taking longer for out-of-work people to find a job. At their last meeting of 2024, Fed policymakers reined in the number of rate cuts expected in 2025 as Chair Jerome Powell made clear that the central bank needs to see more progress of easing inflation. Lower borrowing costs are typically positive for bullion, which doesn’t pay interest. Still, bullion has surged nearly 28% this year and is on pace for the strongest annual performance since 2010, supported by monetary easing, safe-haven demand and sustained buying by the world’s central banks. Spot gold rose 0.8% to $2,636.57 an ounce as of 10:46 a.m. in New York. Silver also advanced, while platinum and palladium fell.
The Federal Reserve did what many thought it couldn’t achieve in 2024, and yet in one respect it still ended the year the way it started, worried about stubborn price pressures. What it pulled off was a rare economic soft landing, using elevated interest rates to nudge inflation lower without triggering a U.S. recession. Unemployment rose but never got out of control. The economy remained surprisingly strong. And policymakers felt good enough about their progress to start cutting rates for the first time in more than 4 years. Yet it’s clear that the No. 1 concern for Powell and his colleagues as 2025 looms is the same issue that attracted so much of their attention a year ago: inflation. While a key gauge of inflation tracked by the Fed is considerably lower than its 2022 peak and down from a year ago, it is still above the Fed’s 2% target. And it has been moving sideways in recent months, another point of concern.
A selloff in the world’s largest technology companies hit stocks in the final stretch of a stellar year. In another session of slim trading volume, which tends to amplify moves, the S&P 500 lost 1.6% and the Nasdaq 100 slipped 2%. Every major industry fell, with Tesla and Nvidia leading losses in megacaps. To Tom Essaye at The Sevens Report, sentiment is no longer euphoric, and markets will start the year with regular investors much more balanced in their outlook, and that would be a “good thing as it reduces air pocket risk,” but advisors have largely ignored the recent volatility. “It’s fair to say that this recent dip in stocks has taken the euphoria out of individual investors, but it has not dented advisors’ sentiment,” he said. “And if we get bad political news or Fed officials pointing towards a ‘pause’ in rate cuts, that likely will cause more short, sharp drops.”
Mortgage rates rose again this week to end the year slightly higher than where they began. The average 30-year fixed-rate mortgage rate was 6.85% for the week through Wednesday, according to Freddie Mac data. That’s up from 6.72% a week earlier. Average 15-year mortgage rates rose to 6% from 5.92%. “Mortgage rates increased for the second straight week, rebounding after a decline from earlier this month,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “While a slight improvement in new and existing home sales is encouraging, the market remains plagued by an overwhelming undersupply of homes. A strong economy can help build momentum heading into the new year and potentially boost purchase activity.”
Volatility should be expected to remain high as investors will be closely watching for hints on the upcoming monetary policy direction. Many investors have redoubled their efforts to ensure that their portfolios are sufficiently diversified in the hope 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)
| Dec. 20, 2024 | Dec. 27, 2024 | Net Change | ||
| Gold | $2,626.04 | $2,616.03 | -10.01 | -0.38% |
| Silver | $29.43 | $29.38 | -0.05 | -0.17% |
| Platinum | $934.15 | $921.50 | -12.65 | -1.35% |
| Palladium | $924.36 | $916.01 | -8.35 | -0.90% |
| Dow | 42841.67 | 42992.58 | 150.91 | 0.35% |
Previous Year Comparisons
| Dec. 29, 2023 | Dec. 27, 2024 | Net Change | ||
| Gold | $2,067.00 | $2,616.03 | 549.03 | 26.56% |
| Silver | $23.96 | $29.38 | 5.42 | 22.62% |
| Platinum | $999.50 | $921.50 | -78.00 | -7.80% |
| Palladium | $1,110.20 | $916.01 | -194.19 | -17.49% |
| Dow | 37689.40 | 42992.58 | 5303.18 | 14.07% |
Here are your Short-Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 2581/2541/2499 | 28.57/27.64/26.54 |
| Resistance | 2662/2704/2743 | 30.61/31.70/32.64 |
| Platinum | Palladiumn | |
| Support | 912/898/881 | 893/866/831 |
| Resistance | 943/960/974 | 955/990/1017 |