The correction in precious metals and miners is expected to come to an end in the near future. Once this correction is completed, it is anticipated that gold will surge above $2100 to set new all-time highs. Additionally, it is customary for precious metals to experience a rally in presidential election years, and 2024 is not expected to be an exception to this pattern.
Looking at key economic insights ahead of the next week’s Fed meeting, it has been observed that GDP growth in the fourth quarter surpassed expectations, with an increase of 3.30% compared to the projected 2.0%. However, jobless claims have also risen, with initial jobless claims increasing to 214,000. Despite this, core PCE and personal spending remained on target, with the potential for inflation to increase in the next quarter due to elevated shipping costs.
An inverted yield curve warning has surfaced, with economist David Rosenberg stating that continuing to hike rates after an inversion historically leads to a recession. As a result, the odds of a 2024 downturn remain elevated. Consumer spending may also face challenges, as high interest rates are attributed to the reluctance to buy homes and cars, leading to diminished future buying plans.
In the commodities market, metals and miners are completing intermediate cycle lows, with the expectation that prices will bottom around next week’s Fed announcement. Gold is currently consolidating ahead of the meeting, while silver has completed a swing low after testing the $22.00 level. Platinum and mining stocks are also showing signs of potential bottoming, depending on specific price levels to be monitored.
Looking beyond the commodities market, concerns have also been expressed about Tesla shares and the S&P 500, particularly in relation to overbought levels and the potential impact on the market as a whole.
Overall, it is expected that the intermediate-degree pullback in metals and miners will come to an end in February. Once this correction is completed, it is expected that gold will surge above $2100. It is also noted that historically, precious metals rally into Q3 of a presidential election year, further supporting the expectation of a strong performance in 2024.
