Precious Metals Slowly Melt Lower

With the stock market catching its breath before a new earnings season begins, we’ve been trying to highlight other market trends. And right now, one of those is in the precious metals section of the commodities space. 👀

Gold, silver, platinum, and palladium are all considered precious metals for those unfamiliar. These metals are rare, naturally occurring metallic chemical elements of high economic value…hence the name. *cue the Gollum “my precious” meme.*

While these are all important for economic purposes…making their way into technology, consumer goods like jewelry, and elsewhere, they’re not like base metals copper, nickel, aluminum, etc., that primarily serve an industrial need. 💍

In the investment world, they’re often included in people’s portfolios as an “inflation” or “end of the world” hedge. As a real asset, the theory is that these physical goods of high value should go up in value during times of economic uncertainty or high inflation. That theory, while logical, doesn’t always hold up when looking at the data. However, it’s still a core investment pitched to investors, professional and retail alike. 🪙

So why are we talking about precious metals today? Some investors in the community have recently highlighted the slowly declining price action over the last few weeks.

Below is an overlay chart of gold, silver, platinum, and palladium. As we can see, gold has held up the best but is still hitting three-month lows, along with silver and platinum. Meanwhile, palladium made fresh four-year lows this week.  👇

Now this doesn’t necessarily imply that prices will continue lower. But with inflation coming down and a lot of the economic uncertainty being removed from the market recently, it’s not surprising to see these tangible assets start to move lower. 🔻

The current backdrop is causing many investors to rethink where this group could be heading in the short to medium term. As such, this chart will undoubtedly be on investors’ radars as we head into the second half of 2023.

As always, we’ll keep you updated on how this short-term trend develops. But for now, traders in the community are bracing for a test of those March lows. 😬

Gold Soars To All-Time Highs

About a week after the chatter around gold began to pick up on Stocktwits, the shiny metal is hitting new all-time highs. But still, some are perplexed as to why it’s rallying. 🤔

Bears argue that gold should not be rallying in the current environment. After all, inflation continues to trend back toward the Fed’s 2% target, and the economy is holding up well thanks to a strong labor market and consumer spending. And with the risk-free rate still above 5%, some investors and traders argue there are better alternatives to gold and precious metals as a group.

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Oil & Gas Sector Loses Its Energy

After a strong run throughout the summer, it’s been a rough two weeks for energy-related commodities and stocks. Today, an accelerating decline helped bring the sector back to the forefront of investors’ conversation. Let’s take a look at why. 👇

In very short-term fundamental news, gasoline inventories surprised to the upside today on weak demand. That caused the commodity to extend its recent selloff. But more importantly, we also saw heating oil and crude oil selloff in tandem after holding relatively strong during gasoline’s pullback.

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Grains Lose Their Gains

Grain commodities were the talk of the town for a bit during the pandemic, as soaring prices pushed up producer and consumer inflation. They’ve not gotten a lot of headlines lately, as a slow and steady decline is less interesting than a sharp increase. 😴

However, they were back in the news today after making a swift move lower. The USDA quarterly grain stocks report showed higher stocks and production than initially anticipated. Wheat was hit the hardest, though soybeans and corn were both down too. 📉

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Breakfast Is Getting More Expensive

Some say breakfast is the most important meal of the day. But unfortunately, the commodity markets are saying that prices to fill your bowls and cups each morning could be heading higher. 🥣

If we look at Finviz’s year-to-date performance chart for the major assets tracked by the futures markets, four of the top five gainers are agricultural commodities. Orange juice leads the pack, rising 84.53%, followed by sugar (+44.2%), Cocoa (+39.68%), and Oats (+30.10%). They’re only separated by the Nasdaq 100, which is up 36.91%.

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