In a week marked by economic uncertainty and shifting market sentiments, the Precious Metals sector found itself at the center of attention, driven by renewed hopes of a Federal Reserve policy review. Gold, the perennial safe-haven asset, experienced a rollercoaster ride, opening at $2,301.93 and closing strong at $2,360.41 amidst whispers of potential interest rate adjustments.
Analysts speculate that softer labor reports could serve as a tipping point for Fed Chairman Jerome Powell, prompting a reassessment of economic conditions. As eyes turn towards key economic data releases in the week of May 13th, such as the Producer Price Index (PPI) and the Consumer Price Index (CPI), the possibility of Gold reaching new heights looms large, contingent upon these indicators aligning with recent labor trends.
Following in Gold's footsteps, Silver surged, breaching the $28 mark and hinting at a potential challenge to the psychological threshold of $30. Amidst these movements, Platinum and Palladium also saw gains, reflecting hopes for manufacturing expansion amidst broader economic shifts. However, amidst the market intricacies and political maneuvers of an election year, the timeless allure of Precious Metals remains steadfast, offering both a haven and a harbinger in times of uncertainty.
Gold
Renewed hope that the Federal Reserve might indeed review their decision to ease interest rates was the fuel that drove the Precious Metals Markets last week. Gold opened the week at $2,301.93, resisted a bear charge early, and rallied hard on Thursday and Friday to close solidly at $2,360.41. Following back-to-back softer than expected labor reports, analysts believe this could be enough of a signal to Fed Chairman Jerome Powell to consider that the economy may be cooling, and interest rate cuts are proper. Key economic data releases the week of May 13th could possibly vault Gold to another all time if those reports confirm the labor results. The Producer Price Index (PPI) and the Consumer Price Index (COI) are both key indicators for the Federal Reserve in their attempt to control the speed and growth of the economy. Softer inflation numbers from April would signal the opportunity to ease off the tightening policies of the last two and half years.
Silver
Silver followed Gold’s lead and took it to the next level. The shiny metal opened the week at $26.56 and $1.62 later ended the week at $28.18 for a very respectable 6% climb. Eyes should be on two events. Like Big Sister Gold, Silver will be eyeing the inflation numbers coming out the week of May 13th. Firstly, will there be another challenge to the important $30.00 psychological mark? And if it is knocked back down away from that number, will it consolidate as quickly as it has the last two attempts. If the latter answer is yes, it will signal that thirty something Silver is not very far down the road. Buying is brisk for Physical Silver which is clear on both recent rallies following corrections. Premiums on Silver American Eagles remain high with internet dealers selling rolls of 20 at 35% over spot. Down from the record highs of a year ago but still historically abnormal. These premiums are not deterring the Silver community from stacking under their beds.
Platinum And Palladium
A rare sign of life comes from the Platinum Family of Metals. Both Metals rose 4% on the week responding to the negative labor reports and hopes of interest rate easing which would in turn allow manufacturing expansion which is necessary for the success of these two metals. Platinum opened at $957.80 and gained nearly $40.00 to $997.11. Palladium’s contribution to the party was an open at $941.88 with a gain of $37.68 to $979.56. With Platinum and Palladium trading at parity, there should be some interesting bets in the coming months as one or the other traditionally will shine much brighter than the other.
Conclusions
Never forget we are in an election year. The incumbent Administration will pull out all of the stops to allow the facade of a healthy economy to appear so by election day. You can not rule out gifts for votes. Just two weeks ago, the White House defied the Supreme Court yet again by forgiving billions of dollars more in student loan debt. Chatter on the back channels includes a possible $1,400.00 “stimulus payment” this summer to “those that need it the most.” An interest rate decrease in June, would not be as effective to the short memory of the American Public as an interest rate decrease in September would be. Any bank “consolidations”, formerly known as “failures” will be very soon, or post-election. Gold and Silver are not only excellent stores of wealth and safety, but they also both prophesize eerily accurately. There is never a bad time to buy Precious Metals. But some times are better than others.
Sincerley,
Doug Pullen
President of GMRgold Companies