Precious metals news

U.S. weekly jobless claims rose to 242,000 for the week ending June 8, the highest level in 10 months, indicating a cooling labor market. This increase, surpassing economists' forecasts of 225,000 claims, reflects the delayed impact of the Federal Reserve's interest rate hikes. The unemployment rate also rose to 4% in May, while economic growth slowed in the first quarter.

In May, the producer price index (PPI), which measures prices producers receive for goods and services, unexpectedly fell by 0.2% instead of rising by the anticipated 0.1%. This decline, driven by a significant 0.8% drop in final demand goods prices, suggests a pullback in inflation. Additionally, initial unemployment claims rose to 242,000, the highest since August 2023. Stock futures gained modestly, while Treasury yields declined following the report.

Gold prices declined slightly after the Federal Reserve indicated only one interest rate cut for 2024, disappointing investors who hoped for two cuts. Despite a cooler-than-expected inflation report limiting the drop, spot gold fell 0.2% to $2,317.38 per ounce, and U.S. gold futures declined 0.9% to $2,333.10. Analysts suggest that gold's fundamental support remains strong, but surpassing $3,000 per ounce is unlikely.

Gold's surge to record highs is expected to continue throughout 2024, fueled by central bank purchases, particularly from China, along with geopolitical tensions and economic uncertainties. Despite the strong fundamentals supporting gold, analysts believe reaching $3,000 per ounce is unlikely. Currently, spot gold trades around $2,300 per ounce after hitting a record $2,449.89 on May 20, with expectations of reaching $2,600-$2,700 by year's end.

Americans should not expect interest rate cuts soon, as the Federal Open Market Committee is likely to keep rates steady in its upcoming decision, influenced by a strong jobs report. The CME FedWatch Tool indicates a 99.4% chance of unchanged rates. Despite initial projections for three rate cuts this year, Fed Chair Jerome Powell has emphasized that the central bank will maintain current rates until the economy shows sufficient signs of cooling.

To counter de-dollarization, the US should maintain domestic stability, pursue strong trade partnerships, and promote technological solutions, according to Carla Norrlöf, a think tank expert. Although the move away from the US dollar by countries like Russia, China, and other BRICS states has accelerated, Norrlöf believes that with strategic actions, the US can keep the dollar dominant. While de-dollarization has gained attention, its impact remains uncertain.

A bond-market indicator signaling a recession has been flashing since 2022, the longest on record, but it doesn't always predict immediate stock market trouble. Verdad Advisers analysts suggest this time might be different. Typically, equity investors react negatively when an inverted yield curve steepens, as it often signals a Fed response to economic downturns. However, the Fed's planned rate cuts aim to achieve a soft landing amidst ongoing economic growth, potentially leading to a prolonged inverted yield curve without immediate adverse effects.

The Consumer Price Index (CPI) showed a slight and unexpected dip in May, suggesting potential price relief for consumers and raising questions about the timing of Federal Reserve interest rate cuts. Annual inflation eased to 3.3% from 3.4% in April, below expectations. Monthly inflation was flat, the lowest since July 2022, and core CPI, excluding food and energy, increased by 0.2%, the lowest since October. These figures indicate a possible normalization of inflation, which could influence the Fed's future rate decisions, though rates are expected to remain unchanged for now.

The dollar fell on Wednesday after data showed May's consumer prices rose less than expected, fueling speculation that the Federal Reserve might cut interest rates as soon as September. Headline inflation was flat, and core prices increased by 0.2%, both below forecasts. This has boosted the probability of a September rate cut to 73%, up from 53% the previous day, and increased expectations of a second rate cut by year-end.

China has called quits on its 18-month gold buying spree, causing precious metal prices to stumble this week as the world’s largest buyer unexpectedly closes its tab.
In 2023, the People’s Bank of China purchased more gold than any of the world’s other central banks, swelling its reserves of the precious metal to more than 2,000 tons to break free from the U.S. dollar standard. Chinese consumers have been following suit, amassing gold coins, bars, and jewelry as Chinese stocks, currency, and real estate have succumbed to economic volatility and plunging value.

U.S. crude oil prices rose above $79 per barrel on Wednesday, extending gains as the Department of Energy (DOE) and OPEC projected a supply deficit due to increased demand. The DOE raised its global oil consumption growth forecast to 1.1 million barrels per day (bpd) for this year, up from 900,000 bpd, while OPEC maintained its forecast of 2.2 million bpd. These optimistic projections contrast with the International Energy Agency's bearish outlook on demand. Current energy prices show significant gains in oil and gasoline, while natural gas has also seen a substantial year-to-date increase.

Gold prices remained stable within a narrow range on Wednesday as investors awaited U.S. consumer inflation data and the Federal Reserve's interest rate policy announcement. Spot gold slightly dipped to $2,314.56 per ounce, while U.S. gold futures rose to $2,331.10. The market is focused on the Fed's stance on rate cuts, influenced by persistent inflation and strong job market data. Additionally, recent strong U.S. job reports and China pausing gold purchases led to gold's biggest daily drop since November 2020. Despite high prices, Asian demand for gold continues to rise.

Despite near-record prices, gold demand in Asia is soaring as buyers seek a hedge against geopolitical and economic uncertainties. Spot gold is trading above $2,300 per ounce, up 12% year-to-date and close to its all-time high. Reduced confidence in real estate and equities is driving this demand. Analysts suggest that once economic conditions stabilize, interest in these other investments may return. In Japan and China, investors are particularly bullish on gold, with Chinese gold coin and bar purchases rising 27% in the first quarter.

Japan's wholesale inflation surged in May at the fastest annual rate in nine months, driven by a weak yen that increased import costs. This rise complicates the Bank of Japan's decision on raising interest rates, as higher prices from cost pressures could reduce consumption and hinder demand-driven inflation. Analysts note that with energy prices expected to rise and government utility subsidies ending in June, the BOJ may need to wait for wage growth to boost consumption before considering rate hikes.

Gold prices remained steady around $2,300 an ounce in Asian trade on Wednesday, as traders awaited key signals from a Federal Reserve meeting and upcoming inflation data. Despite recent declines due to rising Treasury yields and a stronger dollar, gold found support at this level. The Fed is expected to keep rates unchanged but future rate decisions and the potential for rate cuts in September remain under scrutiny, especially with persistent inflation and a robust labor market.

Earlier this year, four states took steps toward strengthening sound money by lifting or reducing taxes faced by holders of physical gold and silver. Only a few months later, three other states have actually implemented new sound money policies, and by doing so, they have improved their citizens’ economic standing.

Something changed in 2022 when the U.S. money supply contracted while the U.S. Government continued to issue trillions in new Treasuries.  Since the 2008 Global Financial Crisis, the U.S. money supply and cumulative federal deficits have increased in tandem, but this changed in 2022...

The Federal Reserve's decision to maintain high interest rates for an extended period has forced American businesses and consumers to delay major purchases and investments. Companies are rethinking their spending on equipment, inventory, and hiring, leading to a slowdown in economic activity. This shift is evident in the decreased projection for manufacturing capital investments and a significant increase in business bankruptcy filings. The Fed is expected to keep rates steady, continuing to impact business plans and economic growth.

The World Bank has upgraded its global economic growth forecast for 2024 to 2.6%, driven by sustained strong growth in the U.S., which is expected to grow by 2.5%. This revision marks an increase from the previous 2.4% estimate. Despite the positive outlook, the World Bank warns that global growth remains sluggish compared to past standards, with poorer countries struggling under high debts and interest rates, and trade barriers posing risks to prosperity. Additionally, conflicts in Ukraine and Gaza are adding pressure to regional economies. The U.S. economy's resilience in the face of high interest rates has been a significant factor in this improved forecast.

U.S. Treasury yields are expected to remain stable over the next three months and decline slightly by year-end due to diminishing expectations of Federal Reserve interest rate cuts. After a significant drop from October's peak of 5.02%, yields have rebounded to 4.44% amid strong economic data and persistent inflation. Financial markets now anticipate only two 25-basis-point rate cuts this year, starting in September, with some economists predicting even fewer cuts. According to a Reuters poll, the 10-year Treasury yield is forecast to be around 4.35% at the end of August, then gradually decrease to 4.23% and 4.13% over the next six and twelve months.