Phil Streible with Blue Line Futures discusses Gold, Silver, Copper, Platinum, and other commodity topics.
Phillip Streible, Chief Market Strategist
AUTO-TRANSCRIBED
Good morning, it’s Monday, December 18th, about 6 a.m. Central Time. Overnight the precious metals are flat after Friday’s selloff. You have February gold unchanged at 2035, March silver up 6 cents at 2422, March copper unchanged at 388, and January Platinum up three at 956. So more and more Fed officials are coming out; they’re really pushing back and walking back speculation that a Fed rate cut is imminent. I think that they were comfortable with the pricing in of June and also December, but when you start to see that Dot Plot shift and none of the Fed officials confirmed about these interest rate cuts, it just more and more of them were done with raising rates, but the Dot Plot and also the data starts to factor in these three interest rate cuts. I think that the Fed still believes that inflation is quite too high; it has not achieved their target. I frankly don’t know if it ever will achieve their target. Many things where prices had gone up are going to be here to stay, and I think that there’s new floors in a lot of different markets and also in a lot of the commodity markets out there. Those cases for silver back in the teens, I think those days are gone unless you get another pandemic or something cataclysmic. But I think new price levels like 20, 21, 22, that all seems to be new comfort zones on where prices are at, like crude oil on the 50. I don’t necessarily think that there’s a case for that anymore. High 60s, that could be the bottom where it was 40s and 50s, you know, five and 10 years ago. So I think that the Federal Reserve is really going to continue to watch the labor market, watch the data point, keep an eye on jobless claims, and they’ll get that clarity from whether or not they’re going to cut rates on that March meeting. When that Dot Plot did come out and it started factoring January as an early interest rate cut, there would have to be complete chaos and panic in the market, and I just don’t see that right now. Even Goldman Sachs over the weekend increased their price target on the S&P to 5100. So trading right around 4775, that’s about an 8% move from here. So if you look at the precious metals, we did make that all-time high on the gold market, and now we’ve had this recent bounce back up after that fed decision. 2063, your resistance point. I think if we close over there, we got a really strong case for starting to threat that all-time high to the upside. I think it’ll take a little bit more than just speculation on interest rate cuts, but the real reality of it and the potential for the Fed to make an insurance cut instead of decreasing 25 basis points, just coming out with it with a straight 50-point cut could really send that market coiling higher. So your support levels, there’s a congestion point where you have a golden cross that’s setting up; that’s where the 50-day moving average crosses over the 200-day moving average. That’s between 2002 and 1990 on the downside. So the market is currently in a neutral trend. You got to get that breakout over 2050, 2063 in order to reestablish the bull trend. Now silver, because of that breakdown that we had, um, leading up into this short-term rally that we’ve got going on right now, that it did trigger a bearish trend. You’ve got a close over 2493 in order to take it to a neutral, and most likely it’s going to be in the high 25s of 26s to take it on to that next level. Really my thought on Silver, despite what everyone’s thinking, is really it’s just kind of in no man’s land. I’m not really excited about it here, purchasing it in these levels, $24.25. It’s not very exciting. I think below 23 is more of a reality of catching some kind of bottom. I think 25, 26, 27, 7 is a bit too high given that the recovery in China just isn’t there at the moment. They are indicating they want to do more things, but it just doesn’t have that one-two punch to get the gasoline on the fire for the silver market. You need gold taken off, you need the Chinese recovery there, you need some tightness in supplies, which we do have. There’s multi-year deficits in the silver market. Mexico faces some production issues because of increased regulation in the mining sector, but you got to get it’s just you need the one-two punch. You need the combination going in order to get silver going a lot higher. So outside markets, a little bit more constructive. Crude oil up 50 cents, woke up about, you know, 25, 30 minutes ago, and prices were negative. We’ve recovered a dollar from those lows. Your green markets, they’re all about mixed right now. You’ve got beans down about 2 cents, corn down one, no real action there. Dollars basically flat, equities are slightly higher but given up some of their gains. 10-year treasury yields still below 4%. So, you know, if you got any questions, give me a call. It’ll be a little bit spottier towards the end of the week. I’ll be traveling back to Chicago office, see family, things like that, spend the holiday up there. So you got any questions, give me a call, 312-8581 3. Remember, Futures option trading does involve risk of loss, being not suitable to investors. Good luck and good trading.
Phillip Streible, Chief Market Strategist