Issue 12 – The week of May 1st, 2022

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

Tuesday

• Bank of Canada deputy governor speech. Comments related to BOC policy intentions can affect the CA$ relationship with its major trading partners which can, in turn, affect the price of gold in CA$ terms.
• US API weekly crude oil stocks. A fall in inventories indicates supply chain disruptions continue to affect markets which also acts as an upward inflation indicator.

Wednesday

• US ADP employment change. A change in the number of people employed in the US. A positive change bullish the US$ and bearish for precious metals.
• CAD International Merchandise Trade. The net difference between imports and exports excluding services. A positive number is bullish for the CA$ and bearish for precious metals.
• US FOMC interest rate decision. Interest rate hike will be perceived as bullish for the US$ and bearish for precious metals.

Thursday

• CAD Bank of Canada deputy governor speech. Comments related to BOC policy intentions can affect the CA$ relationship with its major trading partners which can, in turn, affect the price of gold in CA$ terms.

Friday

• US employment rate and non-farm payrolls. A fall in the number of people looking for work and a rise in the number of people receiving wages is bullish for the US$ and bearish for precious metals.
• CAD unemployment rate net change in employment. A fall in the number of people looking for work and a rise in the number of people receiving wages is bullish for the CA$ and bearish for precious metals.
• CAD Ivey purchasing manager’s index. An indicator of general business and economic activity. A read above 50 is considered bullish for the CA$ below 50 is bullish for precious metals.
• US CFTC net gold futures positions. A snapshot of overall long and short futures positions. Indicates general market sentiment.

Geopolitics

The world seems to be continuing to slip further into the abyss with each passing day. The war in Ukraine has no end in sight and has the potential to spill into other countries. Lockdowns in Shanghai show no sign of ending and it looks like Beijing and a host of other places could soon follow suit, causing even more damage to the Chinese economy and global supply chain disruptions. China’s policy of zero-Covid seems more and more to be an unachievable target that does more harm than good.

Inflationary pressures continue to weigh heavily on the markets and economies around the world. The aggressive stand that central banks have taken on inflation in this environment is like walking a tight rope in a strong wind. The destination is achievable but fraught with unseen risks.

Markets this week are set to be on a roller coaster as there are some pretty big reports due out. First will be the FOMC announcement on interest rates on Wednesday than on Friday the US and Canadian employment reports will be released.

The Call

There doesn’t seem to be a lot favouring the precious metals markets this week. Prices are starting the week off on their heels. Given this week will probably see an interest rate hike from the US Federal Reserve the prospects to see gold back above 1900 are rather slim. More than likely the precious metals markets will see further downward movements in the coming week.  

Last Week in Review

Last week it seems the markets finally started to take notice that global central banks are now making a concerted effort to rein in inflation. The result was a blood bath for the precious metals markets and equity markets as well. From the open on Monday through to Friday’s close,  price action was a one-way street south.

	Gold	Silver
Open	1932	24.13
High	1933	24.16
Low	1872	22.70
Close	1897	22.80