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 Thursday, February 1st, about 6 a.m. Central Time. All right. The precious metals are weaker after yesterday’s volatile session. You have April gold on $18 at 2048. March silver down $0.43. 20 to 73. March Copper down four at 386 in April. Platinum down 14 at 917. So one minute here on the Fed. Obviously, it’s over. They left rates unchanged.
It was the post conference discussion with Fed Chairman Powell that really rattled the markets. All I needed to hear was one sentence and the tone of his voice, the way that he was expressing it. And I knew the way this outcome was going to play out. He said the committee does not expect it will be appropriate to reduce the target range.
That’s five and a quarter to five and a half percent in told us gain greater confidence that inflation is moving sustainably towards 2%. That was really showing you that he’s in a holding pattern. He’s going to stay with this hawkish ways and they’re going to stay higher for longer at the moment. So when does the Fed historically cut rates?
Well, when there are signs of economic distress, we just don’t have that in any capacity at the moment. So if you go to the CME’s Fed watch tool, you look at the March meeting, now there’s only a 35% chance of a 25 basis point cut. You go out to me, that’s where things get really interesting. 62% chance that they cut only 25 basis points.
A 32% chance that they’d make a big leap to 50 basis points. 50 basis points would really rattle the market. And it would it would note that something very big and very off is going on right now. Remember, gold likes the timing, the pace and the depth of the interest rate cuts. It also monitors the dollar, yields economic data in the technical picture.
If you get that trifecta where you get the Fed cutting aggressively, central bank buying and geopolitics stay elevated, you could see gold really break out to the upside. So we’re going to have to monitor the data. We do have two more inflation points. We also have annual revisions to CPI. Now, if you look at some things coming out here today, we’ve got the nonfarm productivity index.
We’ve got unit labor costs. We also have initial jobless claims, the initial jobless claims and also the continuing claims. That’s going to affect gold, the dollar and yields. You want to see elevated levels. You want to see that 1.835 million level exceeding the expectations in order to get gold heading higher, dollar going up, going lower and then yields also pulling back.
Now you all also have ism manufacturing index. They expect a rebound on that. That will impact the copper market. And then for you, platinum and palladium lovers out there, construction spending. And you also have lightweight motor vehicle sales. So get into the charts here. The trend on gold is neutral at the moment. You’ve got a break over 2074 on a closing basis, and you’ll trigger the next wave higher where we could start to threaten that 2100 level.
Now, I think that gold remained elevated after the Fed decision because of the liquidation that was going on in U.S. equities. I think people were looking for a small safe haven spot to park their money. We saw all the normal guys getting some getting an allocation of funds moved into it, things like the dollar, things like crude oil, things like the Treasury markets.
At the end of the session, and that’s where they stabilize. Your critical level support on the gold market, the 200 day moving average, which is going to be 2028. Then you push out of the silver market. I don’t really like this chart at all on silver at the moment. There is an upward trend line that looks like it’s still in tact here pretty well.