Walt Breitinger Times Columnist
Weak job reports, European instability, trade uncertainty and inflation upticks point toward upward movement of precious metals.
Gold moved slightly downward on Thursday, but had risen 41.87% since January and 8.41% this month. Technical set-ups point to a continued gold upside.
Odds of an interest rate cut have risen to 74% from 40% a week ago and the dollar, though up, is threatened by government policies. Goldman Sachs research suggested a gold price of $3,700 by the end of the year while JP Morgan suggested a $3,675 level.
As of Thursday morning, gold was trading at 3,636. Some analysts are suggesting a wait-and-see approach on gold investment with so many variables in play.
Meanwhile, silver prices are on the rise at $42 and upwards as of Friday morning, representing an increase of 46% year to date. Some analysts suggest the price could jump to $50 by the end of the year.
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More than gold, silver has a variety of uses, including in renewable energy, solar power and as an electronics catalyst. It is also important for chips and components.
Currently, demand outstrips supply, especially since the mining process finds silver as a byproduct of mining other minerals.
List of ag woes grows
Farmers have voiced complaints across media sources this week as their struggles grow. Some government policy issues have caused concern.
China, which imports 61% of the world’s soybeans, has gone to other countries for their soybeans due to tariff wars with the U.S. Bumper crops of both soybeans and corn have left U.S. farmers with huge supplies and light demand.
Sales to Japan, the EU, South Korea, Indonesia and the Philippines won’t make up even half of the $12 billion sales to China if they fail to purchase U.S. surpluses.
Immigration policies that target farm labor create issues, since 71% of farm workers in the country are not U.S. citizens, and nearly 42% lack legal status.
Cancelled USDA programs, especially those dealing with climate change, have hurt farmers’ pockets since they will no longer be reimbursed for those programs begun under the Biden administration.
Cancellation of USAID to foreign countries will lose $1 billion worth of grain sales.
However, recent talks with China hold hope for an agreement on rare earth metals as well as face-to-face meetings with Presidents Trump and Xi in South Korea this October.
The widely anticipated and suspense-filled USDA crop report released Friday morning was a dud, containing no surprises, and had little impact on prices.
Corn dropped a tad on the huge size of our crop, already anticipated.
Fuel to fast surpass demand
The world may be looking at fuel gluts in the future. Goldman Sachs is predicting a 1.9 million barrels-per-day oil surplus by 2026, while Opec+ is planning significant production cuts.
Wall Street predicts that oil prices may drop to $50 per barrel next year.
Additionally, the liquid natural gas (LNG) markets are headed for an overabundance in the coming year as analysts say that the U.S. is building too many LNG plants.
European shortages of LNG no longer present problems, as the U.S. and Norway have filled supplies that had been low due to Russian pipeline issues.
Global supplies of LNG are expected to meet demand this year, with surpluses forecasted going forward through 2030.
CME midday prices – Price per bushel: November soybeans, $10.65; December corn, $4.26; December wheat, $5.20. Livestock per 100 pounds: October cattle, $230.50; October hogs, $97.35. Metals per troy ounce: December gold, $3,688; December silver, $42.86 Dec. copper per pound: $4.66. October crude oil per barrel: $62.60. September S&P futures are trading at 6594.00.
Walt Breitinger is a commodity futures broker in Indiana. He can be reached at 800-411-FUTURES (3888) or http://www.indianafutures.com.
Pinion Futures, LLC, a CFTC registered Introducing Broker and NFA Member (NFA #0284447) is a fully owned subsidiary of Pinion Risk Management LLC. Information contained herein is believed to be reliable, but cannot be guaranteed as to its accuracy or completeness. Futures and options trading involve substantial risk of loss and is not suitable for all investors.
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