News and analysis

Precious metals help us in making money again. How long are they going to continue filling investors’ pockets? What is a potential for some profit taking? How soon might that happen? Here I express only my humble opinion on this highly encouraging issue.

It’s nearly a week left until the widely expected move lower by the US Federal Reserve (Fed). Its Federal Open Market Committee of 19 members (including 12 voting ones), with obvious reluctance, will lower the borrowing costs range conditions in dollars on the FX market from the current 4.25-4.50% to 4.00-4.25%, and possibly even to 3.75-4.25%. The difference in the latter decision could be made by inflation statistics on the consumer price index (CPI), which is scheduled for this Thursday. JPMorgan’s analyst Fabio Bassi noted on Monday that “the bar for a 50bp Fed cut remains high”, mainly due to last Friday’s job data weakness, but the nearest step is likely “to be limited to a quarter-point reduction”, while Fed’s chair Jerome Powell’s dovish tone at Jackson Hole late August “warrants 25bp easing at the September meeting, an insurance rate cut driven by softness in payrolls while inflation is still above target”. Slowing US jobs curve “virtually” rules out keeping rates on hold, at the same time, but “does not justify a deeper cut”. Well, I have carefully scrolled through many of such types of expert comments, and it seems that this point of view is the most typical currently within the global banking system.

However, the traders’ rule of "buying expectations and selling facts" has not been cancelled, it has been working for years. Therefore, a small rate cut will most likely provoke a moderate outflow of money from risk-insurance assets, such as Gold or Silver, and may even immediately follow the decision. Gold futures were running into the then wall of about $3,500 per troy ounce at the beginning of summer, now they have covered a distance of more than $150 in a short period of time to levels above $3,650, and may have the capacity for a sharp breakthrough to $3,750, I say - but this is if rates are suddenly lowered by 50 basis points. And even then, at the slightest approach to $3,750, I would take profit from most of my buys in Gold, since the next rate decision at the very end of October will probably be unchanged or only 25 basis points. Dovish expectations will be fulfilled in September to the maximum, and there will be nothing more to expect, two 50 bp in a row only happens during a severe recession, and the Fed will definitely not be eager to sound the alarm. So, there are few reasons to go on a march to $4,000, frankly speaking.

I wrote back in the spring that Gold was still looking too expensive well above $3,500. And then I was labelled as a temporary Gold sceptics, but at that time it was absolutely true, as Gold prices did not go higher when the Fed was holding a pause till late August. The Wall St flagships gave me much more money since April to July, and later too. Now Gold will have a new and generally higher range, that's all. In case of an ideal decision for the markets of 50 bp on the eve of September 17, I will leave buy positions in XAUUSD open until the final decision of the committee is announced. But I do not expect too much. If at 50 bp there will be the first and powerful jerk upwards (but probably the neatly last one climb like that for the nearest weeks). Therefore, already on the second wave of the rise I plan to take my profits in this scenario and proudly leave, taking off my hat and saying bye-bye to Gold for a while. If 25 bp, i.e. a small step, then a moderate weakening of risk-hedging assets is almost guaranteed, and in this case I will place a delayed order in advance closing my positions slightly below the market price at that time, and I will place this order just before the decision. Because then even some stronger dollar positioning is possible in a couple of days, on taking forex profits ad well, and a correction in Gold to the area below $3,600 may land. So, the $3,500 level seems to be the lower limit of the new normal, that is, a blurred new technical support, and a descent in its direction after a moderately soft Fed still cannot be ruled out. It would be such a pity to miss out on honestly earned money. Taking profit, it would be wiser to hope for a new race on top to buy probably at some $3,550 area later.

Monero (XMR) is adding 0.9% to $273.00 this week, slightly underperforming Bitcoin (BTC), which gained 1.9% to $112,934. In August, Monero slipped below the $275.00 support and retraced towards $225.00 before recovering. At present, prices are repeatedly testing the $275.00 resistance but have yet to break through. Importantly, each pullback is forming higher lows, signalling underlying strength and mounting upward pressure.

A similar pattern is visible in BTC, which also appears to be coiling for a rally. If XMR succeeds in breaking above the $275.00 resistance, the next target lies around $325.00. Elevated demand for the token further strengthens the case for a sustained upside move.

3M (MMM) shares look well positioned for a breakout. Since April 2024, the stock has been trading firmly within an ascending channel, with both resistance and support levels holding reliably. Momentum typically builds once prices cross above the channel’s midpoint, which then acts as a strong support. That threshold was cleared in May, followed by a three-month consolidation phase.

The current setup increases the probability of an upside move toward the $170–175 range. Even if the full 14% rally is not achieved, the prevailing momentum should be enough to lift prices into positive territory from the present $150–155 band. To manage risk, a stop loss is planned at $142.

Broadcom's quarterly report became the main dish for Wall Street's feast to brush its fresh historical highs. This giant chip business with its capitalization of above $1.5 trillion and famous partners like Apple, Google, Amazon Web Services and Microsoft's Azure has risen even better than the crowd's elevated hopes. So, the initial rally in the extended hours on August 4 and then even higher before the regular session's opening on August 5, exceeded 15%. Broadcom's share price jumped even above the analyst pool's 12-month average target of $355 per share. The stock was not willing to wait that long and reached the mark in one go. After that, it was not surprising that a partial wave of massive profit taking later during the same day reduced the company's ultimate one-off performance to +9.4% "only". Apparently, many investment houses now have no choice but to raise their previous targets to at least $400 for the coming months.

Besides solid fiscal results and forward guidance, this epic jump has been made thanks to the new pact with ChatGPT designer OpenAI. OpenAI is about to launch its first in-house AI processor to ease skyrocketing demand's pressure in hunger for more computing power. This may squeeze the global dependence on Nvidia, and the point here was that the processor was being developed in close cooperation with Broadcom. Nvidia’s graphic chips are still the default choice, but Broadcom has already launched its Tomahawk Ultra networking chip and a next-generation Jericho chip to speed up AI compute, challenging Nvidia’s dominance. Broadcom's chip for OpenAI is expected to be shipped in early 2026. OpenAI allegedly wants to use the new chip internally rather than sell them to third parties like Google, Meta, Amazon or other potential users of OpenAI's products. Broadcom-made offerings for individual cloud giants are well-demanded for their generative AI model training. Meanwhile, Broadcom CEO Hock Tan pointed to some "new customer" who just secured $10 billion in orders, without naming the partner company during a conference hall, but that was probably the same case. Tan is 73 at the moment and "remains committed" to leading the company for "at least another five years".

Back to the set of dry faceless figures for the three months ended August 3, Broadcom announced EPS (earnings per share) of $1.69 on revenue of $15.95 billion vs analysts' estimate of $1.66 on revenue of $15.82B. This achievement added 64% to the profit line in terms of quarter over quarter on almost a billion dollars surplus to the revenue. Sales from the segment of semiconductor solutions, which is actually Broadcom's core business including its custom chips division, rose 57% versus the same period last year to reach $9.17 billion. Sales at the company's infrastructure software segment, which also houses the cloud computing firm VMware, rose 17% YoY to $6.79 billion for the last quarter. As to the current Q4 period, total sales are expected at $17.4 billion to beat expert bets on nearly $17 billion, as the company's CEOs touted "growth in AI semiconductor revenue to accelerate" to $6.2 billion in Q4, also above average expectations for about $6 billion.

"The company is putting a 4th AI customer into backlog", which is "more important" compared to that upside move in overall numbers were "modest", Morgan Stanley already said. Barclays analyst Tom O’Malley shared his view that Broadcom "is firing on all cylinders with a clear line of sight for growth". Broadcom has surged by more than nearly 80% since early April and performed a more threefold jump in its share price over the past two years. If our next goal of over $400 is only 20% away, then it seems like a pittance compared to the numbers, which have been listed here.