US stocks weakened after the recent upside lost some steam. We expect that as markets approach the Thanksgiving holidays, the momentum is likely to continue to moderate; this timing will coincide with the end of the earnings season, removing some of the impetus from the market. Investors are also awaiting the minutes from the FOMC today; however, we expect it to have little bearing on the market; the rhetoric of higher-for-longer is likely to remain intact, but the case for further hikes has now been completely phased out. In other news, despite the fact that mortgage rates for a 30-year fixed loan have been falling for the last couple of weeks, sales of previously owned US homes continued to decline, falling by the most in nearly a year in October, highlighting that high interest rate pain is still to filter through to the market. The dollar remained at the lower end of the range at 103.50; we expect the greenback to find support at 103.10 before seeing a potential trend reversal. The 10-year US Treasury yield is edging lower to 4.40%.
Base metals have moderated slightly today following yesterday's gains. Copper paused above the $8,400/t but struggled to break above the psychological $8,500/t resistance. Aluminium, on the other hand, is playing catch up, gaining above $2,250/t for the first time since early November, closing at $2,258.50/t. Lead is also seen erasing some of the previous rallies; however, the appetite for lower prices is not enough to drive the metal significantly lower, causing lead to settle at $2,271/t. Tin and zinc remained broadly unchanged, closing at $24,991/t and $2,546/t, respectively.
Oil futures fluctuated as precious metals saw another day of strong upside pressures, pushing gold and silver back to $2,000/oz and $23.85/oz, respectively. We believe it is the combination of the monetary policy path from major central banks, along with the weakening dollar, that is supporting gold's performance. While the US economy has so far proved to be resilient, the expectations of the end of the tightening cycle have been priced in, pushing longer-term yields lower. This has created a more favourable environment for gold as a non-yielding asset. We expect these tailwinds to build up, supporting gold momentum into the year-end.
All price data is from 21.11.2023 as of 17:30
