Good morning!
This week, the markets are taking a bit of a breather, pulling back after the strong rallies we’ve seen recently. It’s nothing overly severe—just a healthy pause.
We had a lot of data to digest over the past few days: CPI, PPI, and retail sales numbers. Now that those are out of the way, next week is shaping up to be much quieter, with only a light sprinkling of manufacturing news on the schedule.
Here’s what I’m seeing:
Gold and Silver Take a Break
Gold has been selling off since the election, correcting down about 8.5% from its highs of $2,802. A typical correction for gold falls in the 12–15% range, so we might not be done yet. However, if gold can stay above the $2,500 level—specifically around $2,521 — I think it’s in a good position to find footing and move higher.
Silver is in a similar position, with the $30 level being the key marker to watch. If both metals hold these levels, it’s likely just a pause before their next leg higher.
Grains Rally as Tariffs Loom
Grains have been holding up surprisingly well, with some even rallying. This could be due to buyers getting ahead of potential tariffs under Trump’s administration. It looks like there’s some urgency to purchase grain now, before prices rise, which is keeping demand elevated.
Bonds and the Fed’s Dilemma
One interesting development has been the divergence between the bond market and the Fed. Bonds have been selling off, meaning interest rates are climbing, despite the Fed cutting rates recently. This suggests bond traders are focused on the growing national debt and believe interest rates need to move higher, regardless of the Fed’s actions.
Patience Is Key
As for the broader markets, the S&P 500 has pushed above 6,000 but has pulled back slightly. If it can hold above 5,850, I’d say it’s still looking very strong. With a lighter news week ahead, patience is going to be important. This might be a good time to consider strategies like buying protective puts to safeguard long positions.
That’s it for this week. Let’s see how the market shapes up over the next few days. Have a great weekend, and I’ll see you in the markets!
— Geof Smith
