Phil Streible with Blue Line Futures discusses Gold, Silver, Copper, Platinum, and other commodity topics.
Phillip Streible, Chief Market Strategist
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Good morning. It’s Monday, December 11, about 6 a.m. Central Time. Overnight, the precious metals are softer after Friday’s correction. You have February gold down $4 in 2010, March, silver down $0.05. 2322. March copper down three at 379 and January. Platinum up seven at 927. So precious metals are starting the week. Little changed after last week we saw silver down 6.85%.
Gold down 1.6%, copper down one, while platinum edged out a small gain. So U.S. nonfarm payrolls gained 199,000 jobs last month, well above the 180,000 expected. That’s where the pressure really started to come in. So this week, we’ll see the Fed’s final Federal Reserve meeting where traders are awaiting any kind of indication as to when the central bank is going to start these interest rate cuts.
Traders are pricing in about a 44% chance of the first interest rate cut in March of 25 basis points. Investors will also get the next round of inflation data with CPI coming out on Tuesday this week ahead of that meeting. So the Federal Reserve bankers will have that information ahead of time. Now, if you look at the precious metals, that correction that we saw on Friday really set the tone and kind of reset both gold and silver took them from that bullish trend back to a neutral trend on both fronts.
So if you look at the gold market, for instance, 2066 is that level where we would need to achieve back above on a closing basis to reinstitute a bullish trend on the market. I expect prices to consolidate from here until we get more data and more dialog from the Federal Reserve. Remember, after the meeting we will hear Jerome Powell speak.
I don’t really expect him to change his tune as far as coming out and blatantly becoming going from a hawk to a dove. However, the dot plot could provide some kind of indication as to when the Federal Reserve would make that first cut. So if you look at key levels of support, 2006, which was tested in the overnight session on February gold, that’s your 200 day moving average below that at 1987 is going to be another critical level support.
It not only is a trend reversal point where gold futures could actually go bearish trend, but is also corresponds with the 50 day moving average. Now if you look at the silver market, it is broken much more harshly than the gold market has. I talked about last week where the gold silver ratio started off right around 82 one and I expected things to channel back up to 83 or 84.
It overshot to the upside with that 6% decline, and now we’re sitting at about 86 and a half to one. So your levels of support on the silver market are right around here. A psychological level of 23, 23, 18 is going to be your trend reversal point. We get a close below there, you’re going to see silver go into this bear market.
Now, how steep of a bear market? I don’t expect it to be too deep. I think that too many traders are also anticipating that we do see these interest rate cuts into 2024. So I believe that it would be wise to see value in those long term silver prices below $23 and position for most of 2020 for your critical levels of resistance here.
Minor resistance at the 50 day moving average with futures sitting at 2321, the 50 day moving averages 2348 above. There’s going to be the 200 day moving average at 2421 and a trend reversal point significantly higher at 2518. I don’t think I would wait for those kind of higher prices in order to establish long positions at those levels.
I will look at maybe longer dated call spreads, things like March and even may call options on there to pre-position. If we do see some kind of retest of these recent highs in the market, we got up to about it was 26 and some change. So try and give you a real number here, 2634. That was that Sunday night high on that market.
And then gold really overshot to the upside. I looked only two contracts traded up at that contract high 2152 30 So $2,152.30. That was a recent contract high. Two lots were done up there, so no big move. And that’s what really tells you that if you look at these Sunday night moves, they’re really there’s not a lot of volume on there.
So they tend to give you these false hopes on these types of breakouts. I always say Sunday nights are for lifting positions out of the account, not establishing positions and take advantage of some of these erratic movements up and down. So if you’ve got any questions, give me a call. 312858733. Remember, futures and options trading does involve risk of loss may not be suitable to all investors. Good luck and good trading.
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Phillip Streible, Chief Market Strategist