On the US Front, unemployment is down per expected levels on the latest job report. However, inflation is being noticed at the “very foundation of the economic ladder” on top of a weakening US Dollar. The Fed promises to keep rates down despite inflation signals. This is very bullish for gold and silver. On top of that, the platinum price today makes a quiet but noticeable rise. Let’s take a look at the biggest pieces of news making waves in the economy.
Stimulus & Inflation
This week, the US created 245,000 jobs in November, which does not bode well for the economy. This number was far less than expected, leading analysts to draw conclusions about just how well the economic recovery is not going. Economists expected about 480,000 new jobs to be created last month. However, unemployment still fell to 6.7%, exceeding the expectation of 6.8% unemployment. This number is still greatly above where the US was one year ago.
Senate Minority Leader Schumer noted:
“This latest jobs report shows the need for strong, urgent emergency relief is more important than ever. Senate Republicans are increasingly understanding this urgency, and Leader McConnell should hear their pleas as well as those of the millions of struggling American families. This jobs report is blaring warning that a double-dip recession is looming and must be a wakeup call for anyone who is standing in the way of true bipartisan emergency relief.”
The weaker-than-expected jobs data is backed up by another shred of bad news. The news on payroll data revealed rising inflation as wages increased much more than anticipated. Basically, wages in November grew by nine cents to $29.58. This is up 0.3% from October, and economists expected only a 0.1% increase. So, this brings the year in total to 4.4% increase in wages.
The payroll report is a “wake-up call for Congress and should support more federal stimulus” according to Brad McMillan, CIO at Commonwealth Financial Network. Some say it is possible that Congress can reach an agreement before the end of 2020.
Rising inflation and the high levels of unemployment are both bullish for precious metals. This is because it shows the recovery is not going as smoothly as hoped for. Only time will tell how quickly the vaccine can help reopen the economy. Further lockdown measures in NY and CA suggest there is a possibility of further job market weakness
Metals: Gold and Silver
Gold and silver both saw major drawbacks at the start of the week, however, they both continue to recover. In fact, gold is back on its way up in choppy action after bouncing off the critical support at $1,767 per oz. Similarly, silver bottomed at $22.08 in overnight trading last Sunday night. The silver price today is over $24 per oz.
Darin Newsom of Darin Newsom Analysis pointed out “We are seeing a strong spike reversal after gold bounced off the critical support at $1,767 an ounce and looking at technicals, the short-term trend is pointing to slightly higher prices next week.”
Generally, there is mixed speculation regarding where the gold price is going. With that in mind, most of the speculation remains positive.
Where is the Gold Price Going?
Colin Cieszynski is the chief market strategist at SIA Wealth Management. He is one of the many analysts who are bullish on gold in the near-term. This is because there are more stimulus measures that seem to be coming to fruition. He pointed out “U.S. politicians seem to now be under some pressure to get a new spending/stimulus deal done to avoid a government shutdown which could help to boost gold in the coming days.”
On the other hand, Daniel Pavilonis believes that the gold market is overbought right now. The senior market strategist at RJO Futures suggests that gold could fall below $1,800 per ounce. His prediction is based on the idea that the market will soon recover thanks to the vaccine. Therefore, this means that the stimulus bill is probably no longer relevant. If the economy starts to recuperate, and the dollar subsequently strengthens, it will not be good for metals.
As of right now, the stimulus bill is still under negotiations. Gold and silver prices benefit from positive news on a US stimulus package that may finally pass before the end of the year. Mitch McConnell’s pushback against the passage does not help gold and silver though.
Precious metals investors might have noticed that the platinum price rose this week past $1,000 per ounce. There is a significant inflow to platinum ETF holdings at this time. Platinum and palladium markets are small, so a modest blend from a new demand source has more buying power than it does for gold.
However, it is important to know that usually the platinum price rallies before the gold price. The platinum price today sees growth on the industrial demand front. Therefore, as the platinum price today increases, it also suggests that gold and silver will also rise soon. All three may test their all-time high prices in the coming months.
Analysis from Chris Vermeulen on Kitco suggests that he is bullish on the platinum price and other precious metals at this time. “We believe this move in precious metals aligns with our previous research that a broader market Depreciation phase has set up in the global markets. We believe precious metals are about 24 months into a 100+ month broad market depreciation cycle. This means that we may see a rally in metals that lasts for several more years.”
With the recent climb in the prices of gold and silver today, now could be a good time to buy in while precious metals are less expensive. Take a look at some of our new inventory for each metal, and do not forget to check out our Deals page to save even more! No matter where you are in the US, you can take advantage of our online store. We are always happy to provide you with numismatic coins and precious metal bullion in gold, silver, platinum, palladium, and rhodium.