Precious metals are off to a rocky start in 2024 as the number of interest rate cuts by the US Federal Reserve (Fed) is called into question. The dollar index showed remarkable resilience, bouncing back from the 100 handle, its best start in nearly two decades. Inflation in the euro zone unexpectedly rebounded from 2.4% to 2.9% in December, and the chance that the ECB will cut interest rates in March fell from 70% on Thursday to 40% on Friday. The U.S. employment report showed an unexpected increase in the number of jobs created by 216,000, compared to the consensus of 170,000, making it a 50-50 chance of an interest rate cut in March. The stock market is on the verge of ending its nine-week winning streak, and what was once a “tailwind” from October's lows is now a “tailwind.” Where does this leave us?
The Fed claims it “relies on data,” but with an election year coming up and being apolitical, the current administration appears to be willing to “do whatever it takes” to stay in power. is. I believe Mr. Jerome will be called on the “emergency line” to ease the burden of rising borrowing costs and turn on the “afterburner” in this economy with a series of rate cuts. Of course, we're not discounting the risk of a “prolonged period of rate rises,” but if rates are cut in March, the Fed won't offer a few more “insurance cuts” to get the job done. become. “Put great people into office.” In any case, 2024 will be an exciting, unstable, and truly “crazy” year.
daily gold chart
Despite weakness earlier this week, technicals have been constructive for gold, with prices rebounding solidly from the $50 DMA in 2029. The chart pattern holds a “golden cross” where the 50 DMA is above the 200 DMA. Traders will note that important pocket support lies between $2013 and the psychological $2000 level. Resistance on the chart remains at $2,098, and a break above it on a closing price basis should trigger the next wave of short covering followed by fresh buying. Momentum research is trending down, but not in oversold territory.
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daily silver chart
This week, silver briefly fell below what I call the “value zone.” Before you all get carried away and say that below $50 or $100 is the value zone, I often look at a simple 70 DMA and look at where the price is going over a 2 month period. Understand. Overlay this with some momentum indicators and apply it to your current forecast of supply and demand for the next calendar year. That pivot line is at the $23 mark, where I would use an arbitrary strategy of “dipping” the new position and then adding $1 increments up to $20 per ounce. As for the upside, we believe that $25 or above is the level at which we can reduce the burden while maintaining the “core position.” Different people see things differently. Please use your own judgment regarding position sizing and risk parameters.
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