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 Tuesday, January 30th, about 6:00 a.m. Central Time. Overnight the internet went out, so I got that going on over here. So they’re supposed to call me back with a technician, and it’s supposed to come on at some point here this morning. So I’m going to do the best I can.
So, you got April gold up $8, 2052; March silver down 2 cents, 2321; March copper unchanged at 388; and April Platinum down 7 at 931. So some observations here, yesterday, the precious metals, they opened up really firm, and then shortly after, we saw a big selloff. Gold practically went unchanged, silver also went just about unchanged as well. But as the session progressed, we saw someone come back into that silver market and bid it all the way up and push it to new highs. So the way that I perceive that is somebody probably is thinking something on this Fed meeting, how they’re going to adjust some of the verbiage.
And then also, they’re looking at, you know, again, Chinese stimulus, industrial demand. The dollar index broke out to the upside, that’s the highest level since the last Fed meeting in December, and then it failed as things progressed. Looking at the CME Fed Watch tool, obviously, no chance of an interest rate cut at this meeting. It’s like a 99% chance they leave it unchanged, 50/50 on the March meeting. Now, where the devil’s going to be in the details is that what they expect is, and this is a lot of the major banks out there, they expect that the Fed is going to remove some of the language. So he’ll say that like we’re going to be restrictive for some period of time, for the foreseeable future, for some time. They believe that they’ll remove that commentary there, and that they’ll note that future policy changes depend on the upcoming inflation and other data coming out.
So we got two more rounds of inflation data, and then we also have the annual revisions to the CPI. Now, I look at it very simply as growth is getting better, inflation is getting cooler, and the policymakers are getting less hawkish. So the reason for the cut, that’s another thing that there’s a lot of debate on. The reason for the cut is that if you make a small adjustment now, you won’t have to make a larger adjustment later. So when they wait too long on raising rates, and all of a sudden, they raise like 50 basis points, 75 basis points, things like that, they’re looking at, hey, they probably rose, they waited too long, and then they rose too aggressively going up. So what they want to do is they kind of want to just throttle back the engine a little bit and let things hover. Remember, people are really burdened by the debt, the interest rates on their debt, and also like the housing sector has cooled off. So they want to keep some of these things humming, and it makes a great story for the current elected officials trying to stay within the house and everything. So as far as the president is what I’m talking about.
Now, looking at Silver, it’s stabilized at 22. There are falling inventories, the CME, the LBMA vaults, those are also both declining. So people are starting to take some delivery of these things. We’re seeing demand from green energy improving. I believe that the economy is bottoming, which is quite supportive. The Fed will cut rates, the ECB will cut rates at some point. Those should act as tailwinds. We are starting to see ETF inflows into the silver market as well. Global production’s declining, the deficit gets bigger, you know, in the 2025, 2026, much bigger. So I think silver is now like a long-term viable play for a steady move higher. Not necessarily the green shoots, the shoot to 50 that people a lot of times look for. I think that the industrial demand’s picking up, as evidenced by the US Flash PMI data, where it was over 50. It indicates expansion.
On gold, obviously, gold’s been in this holding pattern right now. I think closer to like 2020 and below is a good spot to start to stick a toe in the water. I think when you start getting these higher levels here, it could break out, but it’s the timing, the pace, and the depth of the interest rate cuts that determine it. The dollar index as well, that’s path, treasury yields, economic data, and then obviously those technicals. So the first interest rate cut, gold has historically rallied 6% within the first 30 days. Remember, past form is not indicative of future results. But we also like to see some central bank buying here on gold, and then obviously, geopolitics has heated up. How will the US respond to this? That’s where we saw oil prices shoot up yesterday.
One other thing to note, I believe that Bitcoin may have bottomed, and it’s starting to turn up. It was that FTX that had to hedge all their Bitcoin in inventory, so the liquidators can have something to work with. That’s a hedge number; you can’t allocate like when it’s volatile like that.
So, you got any questions, give me a call. Like I said, I got no internet, kind of annoying. It’s, uh, realize how dependent you are. So, but I’ll be able to shoot the signal for the trading platforms to my computer and everything, so everything’s pretty fine. So, you got any questions, give me a call, love to talk to you. 312-858-7363.
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