Phil Streible with Blue Line Futures discusses Gold, Silver, Copper, Platinum, and other commodity topics.
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Good morning. It’s Wednesday, December six, but 6 a.m. Central Time. Overnight, the precious metals are mixed after yesterday’s sell off. You have February gold up $3 at 2039 March, silver down $0.08, 2446. March copper up two at 381 and January, Platinum up five at 911. So there’s really four things that are impacting these precious metals right now. There’s not a ton of news flow coming out, at least geopolitically.
And the focus is mainly on this labor data that’s been coming out this week. In the meantime, I think because we had that explosive rally, gold and silver and other key commodities are all trying to find their footing tactically. So you look at some of these main levels, like the 200 day moving average on gold, sitting at 2005, the 200 day moving average on silver at 2419.
Now that takes the last 200 days into account, comes up with an average price and the slope of whichever direction that the metal was trading at. And it kind of finds this happy medium. And I think that’s where the metals are going right now. They’re going to try and find their footing as they kind of catch their breath and look at the bigger picture.
Now, there’s two main things that I’m watching here. One is the interest rate cut expectations. They’re jumping across the globe. We’re in Europe. Traders are expecting 625 basis point cuts in the U.S. We’re expecting 325 basis point cuts. This is all in 2024. And then the Bank of England, they’re expecting three interest rate cuts as well. The timing of these cuts is what is critical because you see these expectations jump for the ECB to make these dramatic cuts and their cuts are expected to start in May.
That’s why the euro currency is beginning to sell off. It has a 57% inverse relationship to the dollar index and a dollar is getting its boost. That also acts as a headwind against general commodities commodity exports and the inverse relationship with the gold market. So you look at the U.S., we’re not expected to make those interest rate cuts the first one until May.
And then also the Bank of England is in June. But if you get the ECB, make an aggressive cuts right out the gate and Jerome Powell holds off or delays it forward. Remember, he was they were late up to rate hike. They rate hiked aggressively. What’s not to say that they don’t push out this rate cut and then end up cutting 50 basis points farther down.
That’ll push gold and silver and other key commodities a bit lower than where you would expect them to fall. Say something like 1950 on gold. Now, I think once the party it’s going on the interest rate cuts, I think that’s when prices really take off and we see something like a retest of this all time high in gold, we see 2300 on gold, we see $30 on silver.
Now, the silver, the wild card there and also the copper market is China. China has been trying to cut rates. They’ve been trying to do everything prop up their property sector. You know, again, their credit rating is under fire right now. So China’s got a lot of problems. If they could get through with it. And I think that they’ll have a better 2024, that’s where that demand picture really comes in.
And the copper market, I do believe that that left hillside risk is limited. So I think that there’s the mining operations are really the ones in control, almost like OPEC with a cartel with oil prices, which is really failing. I’m doing their job right now. I think that copper has a similar situation where you could see coordinated efforts to curb some of that production.
And remember, silver is a byproduct of copper mining export exploration. So if you look at the outside markets here, they’re mixed. You’ve got crude oil down $0.50, 71, 73. I think we’re going to start bottoming out there. And the dollar index, it’s up four basis points at 104. Right now. You’ve got the two year Treasury up two basis points for 52.
And then you look at the equity markets, they’re a bit higher from where we’re at. Volatility, I think a lot of algos are trading in these markets here at the moment. So get questions. Give me a call 312858733. Remember, futures option trading does involve risk last may not be suitable to all investors. Good luck, good trading.
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Phillip Streible, Chief Market Strategist