Gold has been pricing in 50bps cut from Fed: Strategist

"I think a year-end price target for us is $2,750. And about a 12 to 15-month price target is $3,000," Blue Line Futures chief market strategist Phil Streible says about gold prices (GC=F). "And it's always been that pace of the interest rate cuts that happened. You don't want to see a big interest rate cut if you are a gold investor because of the fact that it gets you closer to that terminal rate faster. You want to see a long, drawn-out process."

Streible joins Market Domination to talk about how the Federal Reserve's interest rate cuts could influence commodity prices, from crude oil (CL=F, BZ=F) and gasoline (RB=F) to precious metals like gold and silver (SI=F).

"So I think gold futures are pricing in 50 basis points. That's why we're at this elevated level. If they only cut 25 basis points, I think we could easily see a pullback down to about $2,550. Kind of your line in the sand on the gold market is down at a $2,520 down to $2,500. If we close below there, it could send up some warning signs that, you know, things are going to be a little bit shaky here and there."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Luke Carberry Mogan.

Video Transcript

What does this mean bottom line for prices at the pump?

Where do you see gas prices headed near intermediate term?

Yeah, it's been, it's been a real interesting dynamic because you go to different parts of the country.

We see greatly skewed prices and things like that.

If you look at cushing in the Midwest, we've had five straight weeks of declines here.

We had another big drawdown here last week.

So across the Midwest, we're seeing that kind of impact.

If you get out, back out to the west coast, you know, when you get closer down to Texas, you have those supply disruptions that are there.

So price can remain elevated.

I think prices continue to hold firm going forward.

And who knows?

I mean that could start to bring back the those inflation talks higher CP I numbers and things like that.

So the feds really walking a tight, tight rope right now and no telling how things are going to play out.

Phil, I gotta move over to gold because I'm looking at gold futures up over 25% this year.

It has been a great year to be holding gold.

But I also look at that number and I wonder can gold really go that much higher from the record high we're looking at right now.

How are you evaluating that?

Oh, I really believe so.

I think a year on price target for us is 2750 about a 12 to 15 month price target is $3000.

And it's always been that pace of the interest rate cuts that happen.

You don't want to see a big interest rate cut if you are a gold investor because of the fact that it gets you closer to that terminal rate faster.

You wanna see a long drawn out process.

You want to see a very long journey to get down to that level.

So I think gold futures are pricing at 50 basis points.

That's why we're at this elevated level.

If they only cut 25 basis points, I think we could easily see a pull back down to about 2550.

Kind of your line in the sand on the gold market is down at uh a 2520 down to uh 2500.

If we close there, it could send off some warning signs that, you know, things are going to be a little bit shaky here and there.

Who knows Jerome Powell?

He's thrown some, thrown us some curveballs before where he does one thing and he comes out hawkish on the other ways.

And I think with that higher CP I data.

It wouldn't put me pa put it past me that um you know, he's gonna be a little bit more firm in his discussion.

Phil, we're talking gold.

What about silver?

What do you see there?

Uh Silver had a nice recovery with the copper market that they are really strongly correlated at the moment.

3250 is your key level of resistance.

We did break out over that 3054 level and it kind of puts us in a bit of no man's land.

I know some of the coin dealers that I talked to, they expect prices to come back down to about 29 $28.

So I would be a little bit more patient from here.

I mean, can silver really rally without a strong Chinese economy because they are one of the largest consumers there.

I think that, you know, you need to see them back in the action in order to really get things going.

It has been a nice recovery on copper with copper stocks being drawn down again, the correlation between silvers there.

But again, without a, without a Chinese recovery, you're gonna see copper or I'm sorry, silver price is limited in nature real quick.

Phil, before I let you go, I gotta get your take on copper.

Oh I I'm I am not a believer in copper.

I think it's a great hedge on the short side against uh many of the other medals that she owns.

So I am in the belief that you know China is going to continue to struggle, the demand is not there and prices are going to trend back down to $4.