Guardian Weekly Market Report 106

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Issue 106 – The week of February 26th, 2024

Key Resistance and Supports: Upcoming Week

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SupportResistance
2013.302050.50
1985.902072.20
1963.702107.00
1931.702135.00
Gold
SupportResistance
22.5723.71
22.0024.24
21.1925.89
20.8325.45
Silver

Reports of Note due out this week:

U.S. financial markets on Thursday will be eagerly awaiting the Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditures (PCE) Price Index which will be released at 8:30 AM. This week also brings us new home sales, the Case Shiller home price index and pending home sales.

  • Monday, we see the release of new home sales at 10:00 AM which are expected to be stronger with a median forecast of 680,000 units vs 664,000 previously.
  • Tuesday at 8:30 we see Durable Goods orders which are projected to come in down 0.5%. S&P Case -Shiller home price index will be released at 9:00 AM followed by Consumer Confidence at 10:00 AM. which is forecast to be slightly higher at 115.00.
  • On Wednesday at 8:30, the release of U.S. gross domestic product (GDP) Q4 first revision, U.S. trade balance , retail inventories and wholesale inventories for January.
  • Thursday morning sees the weekly Initial Jobless claims at 8:30 AM. They are expected to rise to 206,000 from last weeks 201,000. Also at 8:30, we see the Personal Consumption Expenditures (PCE) Price Index for January. This is the Fed’s favorite measure of price changes and inflation gauge. 10:00 AM brings us pending home sales with a median forecast of plus 1.5%.
  • Friday at 9:45 AM we see the S&P U.S. manufacturing PMI(final) and at 10:00 AM the ISM manufacturing and Consumer Sentiment.

Geopolitics

The Nikkei 225, which consists of 225 stocks in the Prime Market of the Tokyo Stock Exchange hit a record high, exceeding its previous peak in 1989. This surge is fueled by strong corporate earnings, investor-friendly measures, and a weaker yen. Japan’s equity market has outperformed in the Asia-Pacific, with both the Nikkei and Topix indices up over 10% this year. Foreign investment in Japanese stocks has increased, supported by Warren Buffet’s positive outlook on Japan and the government’s corporate governance reforms. Japanese companies, including Toyota, have reported strong earnings, prompting upward revisions in year-end forecasts. However, the weakening yen has raised concerns, leading to speculation about the Bank of Japan moving away from its negative rates regime.

South Korea raised its health alert to the highest level due to a mass walkout by trainee doctors protesting a government plan to admit more students to medical schools. This has led to disruptions in hospitals, with almost two-thirds of young doctors participating in the walkout. Public hospitals will extend operating hours and open on weekends and holidays to address the strain on the medical system. While the walkout involves a small fraction of all doctors in South Korea, trainee doctors play a significant role in teaching hospitals and are crucial in emergency rooms and operating rooms. The government’s plan has sparked a broader debate about pay and working conditions in the medical profession, with senior doctors and the Korean Medical Association also expressing concerns.

The S&P 500 and Dow Jones Industrial Average hit record highs on Thursday, driven by investor enthusiasm for growth and technology stocks following Nvidia’s strong earnings and outlook. Nvidia’s shares surged after the company forecast a significant increase in first-quarter revenue due to high demand for its AI chips. The S&P 500 and Dow Jones both closed at record highs, with the Dow Jones surpassing 39,000 for the first time. The Nasdaq Composite also rose sharply. The positive performance of Nvidia and other AI-related companies lifted the broader market, with most S&P 500 sectors posting gains. Additionally, optimism about a potential rate cut from the Federal Reserve contributed to the market’s bullish sentiment. However, electric vehicle startups Rivian and Lucid tumbled after forecasting lower-than-expected production for 2024.

The Call

Gold investors are having a tough time with the current market situation. All we read about last week was the incredible NVIDIA rally, adding more than $200 billion making the companies value in the 2 trillion-dollar range. The Tech sector is being driven by the Artificial Intelligence wave and at the same time, Bitcoin and Ethereum are trading steadily higher grabbing attention away from gold. The metal is holding very well above 2000.00 an ounce against the backdrop of the amazing returns many investors are realizing in these other areas. This has drawn attention away from precious metals sector resulting in some ETF selling in gold to help some investors finance the switch into these assets. We still hold firm on our belief that for the short term, gold will underperform while this frenzy continues and are still looking at a range between 1950.00 and 2050.00 for the next few weeks. A trains momentum will always take it farther than anyone expects and in the markets this happens not only on the way up but also on the way down.

Last Week in Review

Gold opened Sunday evening at 2016.90 spot and then traded higher all week making the weekly high of 2042.20 Friday afternoon before closing at 2035.00. For the week gold was higher by 22.00 and finished near the higher end of our range.

Silver opened at 23.45 on Sunday evening and drifted lower all week making the weekly low of 22.57 Friday morning. A quiet rally took silver back towards 23.00 an ounce before settling at 22.96 in the afternoon.  

  • The U.S. Dollar Index finished a little weaker on the week at 103.94.
  • The Gold/Silver Ratio closed a lot mildly weaker for the week at 88.8 ounces of silver for 1 ounce of gold.
GoldSilver
Open2016.9023.45
High2042.2023.50
Low2013.1022.57
Close2035.0022.96
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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