End of Week
Overview – November 11, 2022Precious metal prices continued to rise this week, triggered by a sharp decline in the U.S. dollar after reports indicating a slowdown in the inflation rate. This has led investors to believe than the Federal Reserve may be willing to “pull back” on the pace of interest rate hikes, with many hopeful that the slowdown will begin with the next FOMC meeting in December – perhaps an increase of only 50bp instead of the previously expected 75bp hike.Gold closed Friday at $1771.00, gaining $91.00 for the week. Silver’s price gains were not as sharp given its own price increases the previous week. Settling at $21.70, silver recorded a rise of $0.85 over the previous five trading days.The price movement in the metals, primarily in gold, came in the last two days of trading. Showing a lack of follow-through buying in the early part of the week, gold had slipped to retest the $1700 level by Thursday during London trading hours. However, the CPI release reported that October U.S. inflation rose by 0.4% on a monthly basis, and 7.7% compared to one year ago (cons. +0.6% and 8.0%). Core annual CPI was reported at an annual rate of 6.3% (cons. 6.5%).The U.S. dollar came off sharply and Treasury yields fell immediately. Gold (and silver) took off, rising over the $1750 level by late morning. Gold tested but never “fell” below $1750 for the remainder of the week, and Friday’s price levels (muted by the Veterans Day holiday) remained steady all day. Gold closed on Friday on the high of the week. Silver tested the $21.00 level in Hong Kong on Thursday before the CPI release, and also climbed immediately to $21.80 (rising $0.60 within minutes). Silver’s own high of $22.03 was seen on Friday in Hong Kong. It actually retreated to $21.40 in London but climbed during the New York afternoon, closing on the NY intraday day high.Equities rallied on the CPI data as it was “deemed positive” news, with the DJIA and NASDAQ recording weekly gains of 4.15% and 8.10%, respectively. It is worth noting that both indices, especially the NASDAQ, are still down substantially for the year.Oil prices fell by 4% this week on reports of rising crude inventories, but did rally on Friday on easing COVID restrictions announced in China. The aforementioned U.S. dollar fell by over 4% to two-month lows on the prospect of ongoing slowing interest rate increases. In closing, some turmoil in the Cryptos as FTX, one of the bigger players in the crypto world, filed for bankruptcy on Friday. Could this prompt a divesting in digital assets and a flight to hard assets? We will have to wait and see.
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