A Daily Journey Through the Week's Market
Monday - 9.09.24: Gold inched up to $2,503 per ounce as investors braced for upcoming inflation data, with modest gains reflecting cautious optimism. Silver moved slightly higher to $28.34 per ounce, as expectations of a Fed rate cut remained in play despite mixed economic signals
Tuesday - 9.10.24: Gold rallied to $2,519 per ounce, gaining 0.71% following softer-than-expected CPI data, which reignited hopes for a rate cut by the Federal Reserve. Silver also benefited, reaching $28.76 per ounce.
Wednesday - 9.11.24: Gold pulled back to $2,515 per ounce as geopolitical tensions eased, reducing the demand for safe-haven assets. Silver followed the trend, slipping to $28.74 per ounce. Traders await further clarity on the Fed's policy direction.
Thursday - 9.12.24: Gold advanced to $2,557 per ounce, nearing a recent high, as renewed inflation concerns kept markets on edge. Silver edged up to $29.87 per ounce, with both metals benefiting from a flight to safety amid ongoing economic uncertainty.
Friday - 9.13.24: Gold and silver prices are surging, with gold hitting a record high of $2,601 overnight and silver reaching a three-week high. The rally is driven by favorable technicals, easier central bank policies, and a weakening U.S. dollar. Falling bond yields are also boosting the metals. U.S. stock indexes are set for firmer openings after recovering most of their September losses.
Gold Price Steady at $2,600 as Consumer Sentiment Rises Gold prices are holding steady around $2,600 per ounce amid rising consumer confidence and a moderation in inflation expectations, according to the latest data from the University of Michigan.
Key Points:
- Gold Price: Holding around $2,600 per ounce.
- University of Michigan Consumer Sentiment: Increased to 69, up from 67.9 in August.
- Inflation Expectations: Consumers expect a 2.7% rise over the next year, down from 2.8% previously.
Details:
- Gold Market: Prices are stable near recent highs. December gold futures are trading at $2,606 per ounce, up nearly 1% today.
- Consumer Confidence: The UofM survey shows the highest sentiment since May 2024, driven by improved buying conditions and perceived better prices.
- Inflation Outlook: Short-term expectations are at their lowest since December 2020, with long-term expectations slightly rising from 3.0% to 3.1%.
Analyst Insights:
- The positive sentiment and controlled inflation could influence the Federal Reserve’s decision to cut interest rates by 25 basis points next week. Analysts predict gradual easing to support economic slowing.
BRICS Pushes Us Dollar To 10th Spot Among World Currencies
Why it matters:
The US dollar, while still the most used currency in global trade, has dropped to the 10th strongest currency, according to Forbes. This decline raises concerns as BRICS nations push to reduce dependence on the dollar.
By the numbers:
- The USD is now ranked 10th among the strongest currencies globally.
- BRICS nations are promoting the use of local currencies for cross-border trade.
What’s happening:
BRICS launched a de-dollarization effort, aiming to dethrone the US dollar as the dominant currency in global transactions. If successful, the USD could fall further in the global rankings.
The bottom line:
The BRICS initiative poses a significant threat to the US dollar's status as a top global currency, potentially reshaping international trade dynamics.
Spot Gold Rallies Above $2,525 As U.S. PPI Data Shows Mixed Inflation
Why it matters:
Gold prices jumped above $2,525 per ounce after the U.S. Producer Price Index (PPI) data for August showed mixed inflation signals, hinting at potential Federal Reserve policy shifts.
By the numbers:
- Headline PPI rose 0.2% in August, beating expectations of 0.1%.
- Annual wholesale inflation climbed 1.7%, slightly under the 1.8% forecast.
- Core PPI, excluding food and energy, rose 0.3%, topping predictions of 0.2%.
State of play:
Gold hit session highs at $2,525.43 per ounce, up 0.54%, after the PPI report.
The bottom line:
With inflation pressures easing, analysts suggest the Fed could cut rates more aggressively, boosting gold’s long-term prospects.
CPI Inflation in August 2024 – Key Takeaways
By the numbers:
U.S. consumer price index (CPI) rose 2.5% in August 2024, the lowest since February 2021, according to the Bureau of Labor Statistics. Inflation is down from a 9.1% peak in 2022, with prices stabilizing in categories like groceries and gasoline.
Big picture:
While inflation is cooling, housing remains a key concern, rising 5.2% year-over-year and accounting for 70% of the core CPI increase. Other areas seeing price hikes include motor vehicle insurance (+16.5%) and medical care (+3%).
Driving the news:
Shelter costs are still rising despite rent declines, complicating efforts to reach the Fed’s 2% inflation target. The Fed is expected to cut interest rates as inflation moderates, shifting its focus to avoiding a recession.
What to watch:
Economists predict a quarter-point rate cut at the next Federal Reserve meeting, as the labor market shows signs of cooling
Nassim Taleb: Gold Is The Real De-Dollarization Move
As conversations about de-dollarization intensify, Nassim Taleb believes the real play isn’t in competing currencies but in gold.
Taleb, a statistician and author, took to X to argue that while transactions remain in U.S. dollars, central banks—especially in the BRICS bloc—are increasingly storing their reserves in gold, with prices up 30% year-over-year.
This shift has been building for years, with the freezing of Russian assets post-Ukraine invasion accelerating the trend. "Instead of buying U.S. debt, countries are buying gold," noted financial analyst Angelo Giuliano. The U.S. dollar’s dominance as a global store of value is now under scrutiny, according to Taleb and other experts.
Go deeper:
- Central banks increase gold holdings amid de-dollarization fears
- U.S. debt reliance compared to "Ponzi scheme"
- Analysts predict gold to hit $2,700 in 2025
America Now Has Fewer Employed Workers than It Did a Year Ago
The big picture:
The U.S. economy added 142,000 jobs in August, but the total number of employed workers has declined by 66,000 compared to last year, according to the Bureau of Labor Statistics. Despite the unemployment rate dipping to 4.2%, the job market is showing signs of weakening.
Why it matters:
This marks the first year-over-year decline in employment since the 2020 recession. The drop in full-time jobs, down 1.02 million, while part-time jobs surged by 1.05 million, is a red flag for economic strength. Historically, such trends signal a looming recession.
Driving the news:
- The establishment survey shows job gains, but the household survey reveals fewer employed people overall.
- Temporary jobs have dropped for 22 straight months, down 5.2% in August.
- Full-time employment has been in recession territory for five months, a key recession indicator.
What’s next:
As the Federal Reserve prepares to cut interest rates in response to economic concerns, the likelihood of recession grows. Historically, Fed rate cuts have been followed by economic downturns.
The bottom line:
Despite efforts to paint a “soft landing” for the economy, the data points to a weakening labor market and rising risks of recession.
Elon Musk Warns Us Is Heading For Bankruptcy
Tesla CEO urges drastic cuts in government spending
Billionaire Elon Musk raised alarms about the U.S. national debt during a recent interview at the 2024 All-In Summit. Musk, CEO of Tesla and SpaceX, stated that America is "going bankrupt extremely quickly" as the federal debt continues to climb beyond $35 trillion.
He pointed out that interest payments on the national debt have exceeded $1 trillion this year, surpassing the budget for the Defense Department. "We're adding a trillion dollars to our debt, which future generations will have to pay," Musk said, likening the situation to excessive credit card debt.
Musk emphasized the need for drastic spending cuts, warning that rising interest payments could lead to a future where the U.S. can only afford to pay interest on its debt. He also endorsed a "once-in-a-lifetime deregulation" effort and confirmed his willingness to lead a government efficiency commission if Donald Trump wins a second term.
Go deeper:
- National debt tops $35 trillion
- U.S. interest payments now exceed Defense Department spending
- Musk offers to lead Trump’s proposed government efficiency commission
Next Week’s Key Events
Monday, September 16:
- 8:30 am: Empire State Manufacturing Survey (September)
Tuesday, September 17:
- 8:30 am: U.S. Retail Sales (August)
- 9:15 am: Industrial Production & Capacity Utilization (August)
Wednesday, September 18:
- 8:30 am: Housing Starts & Permits (August)
- 2:00 pm: FOMC Interest Rate Decision
Thursday, September 19:
- 8:30 am: Initial Jobless Claims (Week of September 14)
- 8:30 am: Philadelphia Fed Manufacturing Survey (September)
- 10:00 am: Existing Home Sales (August)
- 10:00 am: U.S. Leading Economic Indicators (August)
Friday, September 20:
- No reports scheduled.
IMPACT ON PRECIOUS METALS MARKETS
Empire State Manufacturing Survey
This report reflects business conditions in New York’s manufacturing sector. A stronger-than-expected result may signal a stronger economy, potentially weakening gold and silver as investors may prefer riskier assets. A weaker result can push investors toward precious metals as safe havens.
U.S. Retail Sales
Retail sales are a critical measure of consumer spending. Higher sales indicate a robust economy, which may lower demand for gold and silver, as investors might anticipate higher interest rates. Conversely, weak retail sales could increase demand for precious metals as a hedge against economic slowdown.
Industrial Production & Capacity Utilization
These reports track the output of factories and the use of productive capacity in the U.S. A positive report could lower demand for gold and silver, as it points to economic strength, while weaker data can increase the appeal of precious metals as safe investments.
Building Starts & Permits
This data is a leading indicator of economic activity in the housing sector. A strong housing market can reduce the demand for gold and silver, while weaker housing data can boost interest in safe-haven assets.
FOMC Interest Rate Decision
The Federal Reserve's decision on interest rates is a major factor for precious metals. If the Fed signals rate cuts, gold and silver tend to rally, as lower rates reduce the opportunity cost of holding non-yielding assets like precious metals. Conversely, a rate hike may push down prices.
Initial Jobless Claims
A higher-than-expected rise in unemployment claims suggests a weakening labor market, which can increase demand for gold and silver as hedges against economic downturns. Lower claims signal economic strength, reducing demand for these safe-haven assets.
Philadelphia Fed Manufacturing Survey
Similar to the Empire State Survey, this report gives insight into manufacturing conditions, this time in the Philadelphia region. A strong reading could reduce the appeal of gold and silver, while a weak report could drive interest in these metals.
Existing Home Sales
Housing market strength generally reflects a strong economy, which could lead to lower gold and silver demand. A drop in home sales, however, could push investors to precious metals for safety.
U.S. Leading Economic Indicators (LEI)
The LEI aggregates several economic indicators and is used to predict future economic performance. A positive LEI reading can reduce demand for gold and silver, while a negative reading can increase demand as investors seek safer assets.
