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Issue 101 – The Week of January 22nd, 2024

Key Resistance and Supports: Upcoming Week

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SupportResistance
2000.002070.00
1952.002097.00
1920.002132.00
1875.002155.00
Gold
SupportResistance
22.1223.40
21.8724.22
21.0425.00
20.3125.65
Silver

Reports of Note due out this week:

This week we will get a key update on the U.S. economy with the release of U.S.gross domestic product (GDP) on Thursday and Friday’s report on the Personal Consumption Expenditures (PCE) Price Index for December – the Federal Reserve’s preferred measure of inflation.

  • Monday sees the U.S. Leading Indicators released at 10:00 AM.
  • Tuesday there are none scheduled.
  • On Wednesday, the S&P flash U.S. services PMI and S&P flash U.S. manufacturing PMI will be released at 9:45 AM.
  • Thursday morning sees the weekly Initial Jobless claims at 8:30 AM. along with Durable-goods, advanced U.S. trade balance in goods for Dec., advanced retail sales and advanced wholesale inventories. At 10:00, we see the release of New Home Sales for Dec.
  • Friday sees Personal income, Personal spending, PCE Index for December along with PCE index (year over year). Then at 10:00 AM pending home sales for December will be released.

Geopolitics

China’s population declined for the second consecutive year, with officials reporting over 2 million fewer people, marking concerns over record-low births and Covid-19 deaths. The mainland population stood at 1.409 billion in 2023, down from 2022, with around 9 million births, the lowest since 1949. Factors like work-life balance, high living costs, and traditional gender roles contributed to a reluctance to start families. Over 11 million deaths, the highest since 1974, were recorded. China’s aging and declining population, coupled with economic challenges, raises doubts about surpassing the U.S. as the world’s largest economy. Efforts to raise the birthrate include policy changes and incentives, but public response remains tepid. The economy grew 5.2% in 2023.

Several U.S. banks reported a significant decline in fourth-quarter profits, primarily due to a drop in interest income and charges associated with replenishing a deposit insurance fund. The decline in net interest margins has been driven by higher payouts on deposits aimed at retaining customers, resulting in an industry-wide contraction. The impact of potential Federal Reserve rate cuts in the future is expected to further dent margins. Most U.S. banks are also paying the Federal Deposit Insurance Corporation (FDIC) fees to replenish its insurance fund. Some banks, including KeyCorp, reported muted demand and forecasted a drop in net interest income for 2024. Concerns about increased deposit costs are also affecting investor sentiment, with analysts fearing a drop in earnings per share for several U.S. regional banks. Truist swung to a loss due to one-time charges and weaker net interest income, while M&T Bank’s profit plummeted due to higher deposit costs and special assessment fees. Northern Trust and Discover Financial also reported declines in profit. Despite these challenges, Goldman Sachs banking analyst Ryan Nash stated that regional banks are well positioned for 2024.

Efforts are underway to secure the release of hostages held by Hamas, with a potential deal involving pauses in violence in exchange for their release. Meanwhile, Pakistan has conducted strikes inside Iran in retaliation for previous attacks, escalating tensions. The Israeli military is reportedly engaged in search and rescue operations, including in a Gaza cemetery, as the conflict’s toll rises, with over 24,600 killed in Gaza since its onset. Israeli military officials note 193 soldiers killed in the ground invasion, and 240 hostages were taken by Hamas during their attacks on Israel on Oct. 7.

Japan has successfully landed its SLIM (Smart Lander for Investigating Moon) spacecraft on the lunar surface, marking the country’s entry into the group of nations with lunar landing capabilities. The SLIM lander, launched in September, touched down on the moon carrying scientific payloads, including an analysis camera and lunar rovers. Japan now joins the ranks of countries like Russia (then the Soviet Union), the U.S., China, and India, which have previously achieved lunar landings. Various attempts by both governments and private companies to land on the moon have been made since the 1960s, with Japan’s recent success adding to the ongoing global exploration of lunar space.

The Call

Gold tested 2000.00 an ounce last week and bounced off this area of support back to the 2030.00 area. The advice we are reading from a lot of analysts and market strategists is that potential gold investors will need to be patient until trends in the economy become clearer. Some analysts see a potential push below 2000.00 as a new buying opportunity. The interest rate cuts that most expected to start in March are now questionable with the economy remaining steady. We expect gold and silver to trade sideways to lower over the next few weeks with gold breaking 2000.00 and testing 1950.00 to 1960.00. On the upside, 2050.00 to 2060.00 will provide short term resistance. As for silver, a break below 22.00 is expected and a test of 21.00 is not out of the question.

Last Week in Review

Gold opened Sunday evening at 2050.50 spot and then traded a little higher into Monday to make the weekly high of 2059.80 before a steady slide into Wednesday afternoon making the low at 2001.70. Gold then recovered mildly to settle in the middle of the range at 2029.00 on Friday afternoon.

Silver opened at 23.21 on Sunday evening and made the weekly high of 23.37 a few hours later. We the drifted lower into Thursday morning making the low of 22.39 before a bounce took it up to 22.85 Friday morning. A small retreat on Friday and silver finished off the week with a close at 22.62.

  • The U.S. Dollar Index finished stronger for the week at 103.07.
  • The Gold/Silver Ratio closed a little weaker for the week at 89.7 ounces of silver for 1 ounce of gold.
GoldSilver
Open2050.5023.21
High2059.8023.37
Low2001.7022.39
Close2029.0022.62
Last Week’s Gold and Silver Ranges

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The information contained in this report is intended to provide market commentary and not as a recommendation or as a basis for investment decisions. The views expressed herein are the author’s and may differ from the views of others at Guardian International Gold. Guardian International Gold is a trader of Precious metals and this communication is to be considered an invitation to trade. Guardian International Gold makes our best effort to communicate reliable information but no express or implied warranty or representation as to its accuracy, completeness, or correctness may be taken.

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