Let me walk you through what’s catching my eye in the markets right now.
Gold on the Move
First up, gold futures (ticker /GC) are breaking out.
We’ve finally cleared the all-important “century mark” at the 2700 level, and now it’s on its way to test resistance around 2745.
This is a big deal. If gold can hold above 2700 and push through that next level, it could set the stage for an even bigger rally.
Silver (/SI) is also joining the party, climbing back above 32.50. Even copper (/HG) is lending a hand, but it’s got a little more work to do. I’d like to see it get above 4.30 before we can say it’s truly playing along.
World Ag Supply Report: A ‘Nothing Burger’
Earlier today, we got the World Agricultural Supply and Demand Estimates (WASDE) report, and as expected, there wasn’t much to write home about.
This time of year, that’s pretty normal. The harvest here in the U.S. is done, and we’re not yet in planting season, so there’s not much new to shake things up.
Now, the focus shifts to Brazil. They’re gearing up to harvest wheat in the next month or so, and their corn and soybean crops will come in around May.
This matters because Brazil is a major player in the global agricultural markets, and their harvests can affect prices for these commodities worldwide.
Why CPI is the Big Deal This Week
While gold and silver are exciting right now, the highlight of the week is tomorrow’s Consumer Price Index (CPI) report.
CPI is a key inflation gauge, and it has the power to move markets. Why? Because the Federal Reserve watches it closely to make decisions about interest rates. And you know, the market always wants lower rates — whether they’re warranted or not.
If CPI comes in hotter than expected, we could see some turbulence as traders start worrying about higher rates for longer. On the flip side, a cooler-than-expected CPI might give the markets a boost on the hopes for the Fed to continue its rate cuts.
Higher interest rates generally make borrowing more expensive, which can slow down the economy. Think about it — if businesses and consumers have to pay more to borrow money, they’re less likely to spend and invest. On the other hand, lower rates make borrowing cheaper, which can encourage growth by giving businesses more room to expand and consumers more incentive to spend.
This impacts all companies, but it hits small caps harder than large caps because small-cap companies often don’t have the same access to capital as the big players. They rely more on borrowing to fund operations and growth. So when rates go up, the cost of borrowing eats into their profits more than it would for a larger company with a bigger cash cushion.
What I’m Watching Next
Here’s how I’m approaching the week:
- Keeping an eye on gold, silver, and copper to see if they can sustain their momentum.
- Watching tomorrow’s CPI report for any surprises.
- Keeping Brazil’s agricultural season on my radar for the longer-term outlook in corn, soybeans, and wheat.
Stay patient and focused. Whether it’s gold hitting a key level or CPI surprising the markets, it’s all about being ready to react, not overreact.
— Geof Smith
P.S. Speaking of gold, my readers and I just nabbed our first win with my Gold Streams strategy. Here’s how we did it.
