Guardian Weekly Market Report
Issue 102 – The Week of January 29th, 2024
Key Resistance and Supports: Upcoming Week
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Reports of Note due out this week:
This week will be a busy one with 2 key updates from The Federal Reserve with its interest rate decision on Wednesday. The Feds meeting isn’t expected to change interest rates but how Fed Chair Powell talks about there meeting afterwards could have an impact on markets. The government is due to release its monthly jobs report and unemployment rate on Friday. Consensus is for 180,000 jobs being created after a strong jobs report for December when 216,000 were added.
- Monday there are none scheduled.
- Tuesday, we start with the S&P Case-Shiller home price index for November at 9:00 AM. Job openings and Consumer Confidence will follow being released at 10:00 AM.
- On Wednesday, the ADP employment report is released at 8:15 and is expected lower at 140,000 jobs vs. 164,000. The federal Reserve will release there interest rate decision at 2:00 PM.
- Thursday morning sees the weekly Initial Jobless claims at 8:30 AM. along with U.S. Productivity. S&P U.S. manufacturing PMI (final) will be released at 9:45 and at 10:00 AM, we see ISM manufacturing for January.
- Friday sees U.S. nonfarm payrolls and the U.S. unemployment rate at 8:30 AM. Then at 10:00 AM we see Factory orders for December and Consumer sentiment (final) for January.
The Biden administration is reportedly exploring the restriction of arms sales to Israel as a means to encourage Prime Minister Netanyahu to reduce the intensity of the military campaign in the Gaza Strip. This move comes after weeks of unsuccessful attempts to convince Israel to alter its tactics. The administration is considering adjusting the pace of deliveries of certain weaponry requested by Israel, such as large aerial bombs, ammunition, and air defenses, with the hope that it would prompt Israel to take actions like opening humanitarian corridors. This marks a shift from rhetorical pressure to tangible policy changes in the Biden administration’s approach to influence Israel’s actions in Gaza. Some Democrats in Congress have urged the administration to exert more influence on Israel.
China escalated military pressure on Taiwan by sending over 30 warplanes and six navy vessels near the island, with 13 crossing the unofficial midline of the Taiwan Strait. This move follows the announcement of expected talks between senior U.S. and Chinese representatives in Thailand to ease tensions. China considers Taiwan its territory and has exhibited displeasure at Taiwan’s political activities by deploying military assets. The situation adds strain as Taiwan’s newly elected president, Lai Ching-te, campaigned for self-determination and rejected China’s threats. Meanwhile, U.S. National Security Adviser Jake Sullivan and Chinese Foreign Minister Wang Yi are in Bangkok for talks, emphasizing the need for strategic communication.
The suspension of trade talks between the UK and Canada indicates a tougher stance on post-Brexit trade deals by the UK. British farmers welcomed this approach, while cheesemakers faced losses, and concerns arose in the automotive sector. The standoff reflects Prime Minister Rishi Sunak’s reluctance to sign trade deals facing domestic criticism. Canada blamed the breakdown on UK regulations barring hormone use in beef. The UK, emphasizing the lack of progress, defended the decision, noting the substantial trade volume between both countries. Sunak, emphasizing the quality of agreements over speed, has signaled a meticulous approach to trade talks. The National Farmers’ Union supported the suspension, citing Canada’s excessive demands. Cheesemakers, facing WTO terms, expressed regret, but industry groups backed the UK’s stance. The suspension also impacts the automotive sector, urging parties to return to negotiations.
Shares of China Evergrande were halted after dropping more than 20% following a Hong Kong court’s decision to liquidate the troubled property developer. The move is part of China’s broader debt crisis. Once a major property developer, Evergrande has been at the center of financial troubles in Beijing. Reports suggest that its overseas creditors failed to strike a deal to restructure, potentially leading to imminent liquidation. Evergrande, known as the world’s most indebted property developer, defaulted in 2021 and initiated an offshore debt restructuring program in March 2022. Chinese policymakers are working to contain the crisis, with recent measures announced to boost liquidity for property developers.
Gold tested 2000.00 an ounce again last week and bounced off this area of support back to the 2020.00 area. We see the support level for gold at 2000.00 being broken and gold testing the 1950.00 to 1925.00 level with the 2000.00 support level becoming a major resistance level. The range for the next few weeks should be from 1950.00 on the bottom to 2050.00 on the top. With 2 key economic indicators this week coming from the Fed and the jobs market, we expect volatility in the metals market to be high with the metal’s prices softening.
Last Week in Review
Gold opened Sunday evening at 2031.80 spot and then traded a little higher before dipping down to 2017.40 Monday morning . Gold then rallied a little to make the weekly high of 2039.30 Tuesday morning. The selling began and the weekly low was hit on Thursday morning at 2004.20. Support at 2000.00 held again and we bounced a little and closed the week at 2018.20.
Silver opened at 22.62 on Sunday evening and sold off to 21.92 Monday morning before rallying to 23.03 on Thursday making the weekly high. Silver then basically traded sideways closing 22.79 Friday afternoon.
- The U.S. Dollar Index finished the week at 103.43.
- The Gold/Silver Ratio closed a little stronger for the week at 88.5 ounces of silver for 1 ounce of gold.
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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.