A Daily Journey Through the Week's Market
Monday - 11.04..24: Gold prices remained relatively stable as investors anticipated the Federal Reserve's upcoming policy decisions. With limited economic data released, the market focused on potential rate cuts, keeping spot gold around $2,736 per ounce
Tuesday - 11.05..24: Gold experienced a slight uptick following the release of factory orders data, which showed a 0.7% decline in October, indicating a slowdown in manufacturing. This reinforced expectations of economic cooling, leading to increased demand for safe-haven assets. Spot gold closed near $2,746 per ounce.
Wednesday - 11.06..24: Gold prices rose to approximately $2,766 per ounce as the Federal Reserve announced a 25-basis-point rate cut, the first in nearly a year, aiming to counter slowing growth. This dovish move enhanced gold's appeal as a safe haven, with markets anticipating further rate adjustments.
Thursday - 11.07..24: Gold prices rose to approximately $2,778 per ounce as the Federal Reserve announced another 25-basis-point rate cut, marking the second reduction this week. Coupled with higher-than-expected jobless claims, this latest cut reinforced investor sentiment that the Fed is committed to supporting a slowing economy. The dovish shift in policy boosted safe-haven demand for gold, with markets now closely watching for further data to anticipate the Fed’s path ahead.
Friday - 11.08.24: Gold prices have experienced a slight decline in early trading, with spot gold hovering around $2,706 per ounce. This movement reflects investor caution ahead of the Federal Reserve's anticipated speeches by Fed Governor Michelle Bowman and St. Louis Fed President Alberto Musalem. The market remains attentive to potential monetary policy adjustments, which could influence gold's appeal as a safe-haven asset. Additionally, ongoing geopolitical tensions continue to shape market sentiment.
Gold and Silver 2025 Forecasts After a Trump Victory
The Big Picture: Analysts are predicting substantial gains in gold and silver prices by 2025, potentially fueled by inflationary policies, increased geopolitical tensions, and safe-haven demand if Trump wins a second term.
Gold Predictions:
- CIBC Capital Markets: Expects gold to average $2,600/oz in 2025, citing inflationary pressures from fiscal spending.
- Goldman Sachs: Forecasts gold reaching $3,000/oz by year-end 2025, driven by rising central bank demand and declining interest rates.
- Citi: Projects gold prices between $2,700 and $3,000/oz within the next 6-12 months, citing trade uncertainties and demand for safe-haven assets.
Silver Predictions:
- CIBC Capital Markets: Sees silver averaging $34.50/oz in 2025, benefiting from both its industrial demand and safe-haven status.
- World Bank: Anticipates a 7% price increase in 2025, building on a 20% gain in 2024, due to strong demand and tight supply.
Why It Matters: If Trump resumes office, anticipated policies—like tax cuts and trade tariffs—could trigger inflation, often boosting precious metals. Rate cuts by the Federal Reserve could also add fuel, making non-yielding assets like gold and silver more attractive.
What to Watch: Market conditions and policy shifts will ultimately steer these predictions. Elevated tensions or changes in economic outlook could make gold and silver essential hedges.
Putin Pumps the Brakes on BRICS De-dollarization
What’s happening:
In a surprising move, Russian President Vladimir Putin stated that Russia won’t be abandoning the U.S. dollar entirely, despite ongoing BRICS efforts to reduce reliance on the greenback. Instead, Russia plans to "refuse using the dollar as a settlement tool," not eliminate it altogether.
Why it matters:
BRICS has been pushing to reduce the U.S. dollar's dominance in global trade, which they argue has given the U.S. outsized economic leverage. Putin’s stance signals a nuanced approach—scaling back dollar transactions while not completely severing ties. His remarks come just as de-dollarization gains traction within the alliance, underscoring the complexities of moving away from a deeply entrenched global currency.
By the numbers:
- Dollar Transactions: Putin acknowledged that dollar-based payments are gradually decreasing but still significant, calling the shift a slow but steady "trend."
- BRICS Payment System: BRICS is developing a unified payment system that will leverage each member country’s infrastructure for financial data exchange, aiming to boost autonomy from Western-led financial systems.
The big picture:
Putin described the U.S. dollar as a “pillar of U.S. power” and argued that its influence is self-eroding, not a direct target of BRICS policies. BRICS countries continue to work on payment systems and local currency trades, aiming for financial independence without an outright ban on the dollar.
What’s next:
With Donald Trump set to return to the White House, questions remain on how U.S.-BRICS relations will evolve. Trump previously hinted at easing sanctions to encourage dollar use, and Putin and Xi Jinping are open to dialogue. A new era of U.S.-BRICS cooperation could reshape the role of the dollar and ease tensions over de-dollarization.
Gold Holds Steady as Fed Cuts Rates
What’s happening:
The Federal Reserve cut interest rates by 25 basis points, bringing the federal funds rate to a range of 4.50% - 4.75%. The move was widely expected as the Fed aims to navigate economic uncertainties and sustain growth.
Why it matters:
This rate cut underscores the Fed's cautious stance as it seeks to balance employment and inflation goals. Lower rates typically support gold by reducing the opportunity cost of holding non-yielding assets, keeping safe-haven demand steady.
By the numbers:
- Current Rate Range: 4.50% - 4.75%
- Gold Price: Trading around $2,690.40 per ounce, up 1.18% on the day.
The big picture:
The Fed provided little guidance on its future path, signaling a wait-and-see approach amid a solid economic backdrop. Investors remain focused on Chair Powell’s press conference for any hints about the trajectory of rate cuts.
What’s next:
Market participants are watching for signs of the Fed’s next steps. Many expect the Fed to continue gradual 25-basis-point cuts, potentially reaching a neutral rate around 3% by next summer, though uncertainties remain.
Gold Prices Surge After Jobless Claims Rise
What’s happening:
Gold prices hit session highs after the latest U.S. jobless claims data showed a modest rise, aligning with forecasts and signaling potential softening in the labor market. Spot gold rose to $2,683.21 per ounce, up 0.91% on the day.
By the numbers:
- Initial Jobless Claims: Climbed to a seasonally adjusted 221,000 for the week ending November 2, matching expectations. This comes after a slight upward revision for the prior week from 216,000 to 218,000.
- Four-Week Moving Average: A smoother indicator of labor market health, this average fell to 227,250, below the expected 237,000 and down from the previous week’s revised average of 237,000.
- Continuing Claims: Rose to 1.892 million for the week ending October 26, surpassing the anticipated 1.880 million and up from the prior week’s revised figure of 1.853 million.
Why it matters:
Rising jobless claims may indicate cooling in the U.S. labor market, a factor that can heighten safe-haven demand for gold. With signs of potential economic softening, investors are turning to gold as a hedge, boosting prices.
What’s next:
As investors watch for further signs of economic slowing, gold prices could see sustained support. Labor market trends and inflation indicators will likely remain pivotal for gold's trajectory in the weeks ahead.
Gold and Silver Markets React to Trump’s 2024 Victory
What’s happening:
In the wake of Donald Trump's victory in the 2024 presidential election, the gold and silver markets have seen a surge in volatility. Initially buoyed by safe-haven demand due to heightened geopolitical and economic uncertainties, both metals have hit significant highs. However, profit-taking and a strengthening dollar have recently tempered these gains.
Why it matters:
Gold and silver are traditional safe-haven assets, often rallying when investors anticipate economic or political instability. The initial reaction to Trump’s victory reflects a flight to safety as investors brace for potential policy changes and global market shifts.
By the numbers:
- Gold: Reached over $2,700 per ounce, marking a record high. This spike was driven by concerns over future fiscal policies, rising geopolitical tensions, and potential shifts in U.S. foreign relations.
- Silver: Nearing a 12-year high, silver prices closely tracked gold’s movement due to similar safe-haven appeal and supply chain constraints.
The big picture:
Trump’s return to the White House introduces a range of fiscal and geopolitical uncertainties, which are expected to impact market behavior in the coming months. Gold and silver markets are likely to remain sensitive to:
- Fiscal Policy Adjustments: Potential tax cuts or increased government spending could weaken the dollar and fuel inflation, supporting precious metal prices.
- Geopolitical Risks: Heightened tensions globally may drive further safe-haven demand, sustaining high gold and silver prices.
- Federal Reserve Policy: Any dovish moves from the Fed to counter market volatility could boost precious metals if lower interest rates reduce the opportunity cost of holding gold and silver.
What’s next:
Analysts suggest that market participants keep a close eye on fiscal policy announcements and geopolitical developments in the early months of Trump’s term. These factors could set the tone for gold and silver performance, with many expecting a continued preference for safe-haven assets in the face of economic uncertainty.
Trump's Strategy Against BRICS' De-dollarization Efforts
What's happening: The BRICS nations—Brazil, Russia, India, China, and South Africa—are intensifying efforts to reduce reliance on the U.S. dollar in global trade, a process known as de-dollarization. This movement aims to diminish U.S. economic influence and create a more multipolar financial system.
Why it matters: A successful de-dollarization by BRICS could weaken the dollar's dominance, impacting U.S. economic leverage and potentially altering global trade dynamics.
Trump's potential approach:
- Economic Penalties: Trump's advisers have discussed imposing tariffs and export controls on nations that move away from the dollar, aiming to deter de-dollarization efforts.
- Diplomatic Pressure: Leveraging U.S. alliances to discourage participation in BRICS' initiatives, isolating the bloc's efforts.
- Currency Intervention: Exploring measures to influence currency valuations, making alternatives to the dollar less attractive.
The big picture: Trump's administration views de-dollarization as a direct challenge to U.S. economic supremacy. Aggressive countermeasures could strain international relations and provoke retaliatory actions from BRICS nations.
What's next: Monitoring BRICS' progress in establishing alternative financial systems and currencies will be crucial. The U.S. may need to balance assertive policies with diplomatic engagement to maintain its financial leadership.
Next Week’s Key Events
Monday, November 11
- Veteran's Day holiday – No major reports
Tuesday, November 12
- No major reports
Wednesday, November 13
- 8:30 am ET: Consumer Price Index (CPI) for October
Thursday, November 14
- 8:30 am ET: Initial Jobless Claims for the week ending November 9
- 8:30 am ET: Producer Price Index (PPI) for October
Friday, November 15
- 8:30 am ET: Empire State Manufacturing for November
- 8:30 am ET: U.S. Retail Sales for October
- 9:15 am ET: Industrial Production and Capacity Utilization for October
IMPACT ON PRECIOUS METALS MARKETS
Consumer Price Index
The CPI is a key measure of inflation, and higher-than-expected inflation figures can increase gold and silver prices as investors look to precious metals as a hedge. Conversely, lower inflation data could pressure prices if it reduces demand for inflation-protected assets.
Initial Jobless Claims
Although this weekly report has a less direct impact on gold and silver, unexpected spikes in jobless claims could fuel recessionary concerns, which may push investors towards safe-haven assets like gold and silver. Conversely, low claims could reduce demand for these assets.
Producer Price Index
Like the CPI, the PPI is an indicator of inflation but from the perspective of wholesale prices. Rising producer prices can signal future inflation, potentially supporting higher gold and silver prices. Lower PPI figures could have the opposite effect.
Empire State Manufacturing Survey
This regional manufacturing index gauges business activity in New York. Weak manufacturing data could indicate economic slowdown, possibly boosting demand for safe-haven metals like gold and silver. Strong data may pressure precious metals as it suggests economic strength.
U.S. Retail Sales
Retail sales data is a key indicator of consumer spending. Strong retail sales could strengthen the dollar and increase confidence in the economy, possibly dampening demand for gold and silver. Weak retail sales data may have the opposite effect, encouraging investors to turn to metals.
Industrial Production and Capacity Utilization
This report reflects the output of U.S. factories, mines, and utilities. Weak production data may signal a slowing economy, driving demand for gold and silver as safe-haven investments. Robust data, however, may reduce precious metal demand if it indicates economic strength.
