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 Wednesday, January 17th, about 5:30 a.m. Central Time. Overnight, the precious metals are weaker after yesterday’s correction. You have February gold down $1 at 2029, March silver down 15 cents at 2293, March copper down 1 at 375, and April Platinum down 5 at 8.98. So, Platinum is getting down to what we perceive as a long-term value zone. Also, the silver market crossing below 23, another area of long-term value zone. Copper is getting in that lower end of the range too, where we like some exposure to all these different precious metals for the long run. But remember to reassess your own risk parameters within your current account.
Now, yesterday, we saw the January Empire State survey was far lower than what was forecasted and reached one of the lowest levels since May of 2020, we’re talking pandemic level lows. So that really had little impact here on Fed Waller’s speech later on in the day, and the market really shrugged off that weaker data. It didn’t start cutting pricing in additional interest rate cuts. What it did here was kind of stall out and played the wait-and-see game.
Now, Fed Waller said that the US data over the previous months have really given the Fed the ability to cut rates, but it’s really a wait and see here as we’re starting to see some of the economic data come back into positive territory, while others show contractions here, supporting that interest rate cut. Now, the treasuries did drop about mid-session quite sizeably, and we saw a big rally in the US dollar, reaching a five-week high and really pushing on up here and breaking out to the upside.
Today, we’re going to see another key economic data point, retail sales. This is kind of one of the biggest ones of the week, and they’re expected at a row 0.3% in December. The forecast really reflects kind of a pickup in those brick-and-mortar type categories. Remember, we did have a milder winter. I think that a lot of people had gone out, started shopping, things like that. People were more mobile in December than usual, given that we didn’t see any kind of cold burst here up until like the last week.
Now, at 2 PM, we’re going to have New York Fed Williams, president, he’s an FOMC voter. He’s going to speak. He’ll be delivering remarks at a New York Fed event. And on January 10th, Williams said that ‘I expect that we will need to maintain a restrictive stance on policy for some time to fully achieve our goals, and it would be only appropriate to dial back the degree of policy restraint when we are confident that inflation is moving toward a 2% on a sustained basis.’ So, you could see he’s another hawk on there. If he comes out with that kind of statement and we see a sharply higher retail sales, you’re going to see that kind of next leg lower on the precious metals.
So, silver is playing catchup from Gold’s $20 correction yesterday. And if you look here at some key levels of support on that gold market, it’s going to be this 2018 down to about 2013. That’s the 200-day moving average right now, around that 2030 level. That’s either side of the 50-day moving average. We do have a big risk-off mood in the US equity markets and in other markets as well. You look at the CME FedWatch tool, we’re sitting right now at about a 65% chance. So, yesterday was a 68-69% chance that the Fed was going to cut rates. You go back last week, it was an 80% chance. So, we’re really losing this momentum.
Something to note, and I think this is one of the most important things on this video, is that historically, going back to 1990, the first interest rate cut within 30 days, gold has averaged about a 6% gain. So, the way I think it plays out, if you do get that interest rate cut, you’re probably going to see that 1 and a half to 2% move that first day. You’ll see follow-through in the overnight session, and then it could drift higher to where those historical gains have been. So, you’re going to want to be positioned for that kind of potential move higher if you’re a believer in gold and you do think that the Fed will ultimately cut rates. So, that’s something to keep an eye on, something to note going back to 1990.
So, if you have any questions, give me a call 312-8581 303. Remember, futures and option trading does involve risk. Loss may not be suitable for all investors. Good luck and good trading.”