The Federal Reserve plans to scale back Quantitative Tightening, currently set at $95 billion monthly, sparking a surge in the price of gold.
As FOMC members uphold their expectation for three rate cuts in 2024, there is ongoing deliberation among some regarding the potential for only two.
Gold spiked to $2225 mid-week, prompting some to take profits. I expect prices to reach $2500+ before the next major correction.
Interest Payments
Personal interest payments (blue) exceed wages (red) by a large margin. The last time debt payments surpassed wages were ahead of the 2008 financial crisis.
Source: https://twitter.com/SamanthaLaDuc/status/1770791896559800526/photo/1
State Coincident Index
The Philly Fed estimates economic activity per State. Only 20 states are showing increasing activity, implying that 30 states are in decline. Historically, this level supports a recession.
Source: https://twitter.com/GameofTrades_/status/1770850472590451053/photo/1
Commercial Real Estate
Past due loans on commercial real estate at the largest banks (>$250 billion) are at 4.11%. At this pace, delinquencies could meet or exceed the post-GFC peak of 8% in the next year or two.
Source: https://twitter.com/m3_melody/status/1770872311475794108/photo/1
Our Gold Cycle Indicator finished at 224 and remains in neutral territory.
GOLD- Gold jumped when the Fed announced it would soon reduce the rate of QT, which is the first step before cuts. A daily close below $2150 would be negative and support a bearish post-Fed reversal. Overall, I expect a robust advance into at least July with periodic price corrections.
SILVER- We saw profit-taking in silver near $26.00, with prices forming a bearish engulfing candle. A decisive close above $26.00 is needed to unleash the bull.
PLATINUM- Platinum remains near its cycle low stuck on struggle street. Prices must get and stay above the 200-day MA to achieve traction.
GDX- Miners slipped after Wednesday’s powerful up day. To extend to the upside, a close above $30.56 is needed.
GDXJ- Juniors need a close above $37.25 to maintain upward momentum.
SILJ- Silver juniors need a close above $9.81 to maintain their upward trajectory.
AAPL- The US Justice Department and numerous States launched an antitrust lawsuit against Apple, alleging the company’s unlawful monopoly in the smartphone market. Things could get ugly, and slipping below the October $165 low would support a notable breakdown.
S&P 500- Another new closing high, and this is one of those market moves that defy gravity until things suddenly unravel; no sign of that yet.
Conclusion
The next big surge in gold has started, and sub-$2000 pricing may be a thing of the past. Gold miners are silly cheap and should play catch up in the coming months.
AG Thorson is a registered CMT and an expert in technical analysis. For daily market updates, consider subscribing www.GoldPredict.com.
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