Issue 18 – The week of June 13th, 2022

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

Monday

• No reports of note due out

Tuesday

• USA Producer Price Index. A measure of commodity inflation. A rising number is bullish for precious metals.
• CAD Manufacturing Sales. A decrease in sales is seen as bearish for the CA$ and thus bullish for precious metals.
• USA API Weekly Crude Oil Stocks. A fall in stocks is seen to be indicating inflationary pressures and supply chain disruptions remain in place.

Wednesday

• CAD Housing Starts. A measure of new homes built. A low number is bearish for the CA$.
• USA Retail Sales. A measure of consumer spending. A low reading is bearish for the US$ and bullish for precious metals.
• USA Federal Reserve Interest Rate Decision. Central bank rate announcement and accompanying statement. Rate hikes tend to be bearish for precious metals prices.

Thursday

• CAD ADP employment change. A monthly measure of changes in employment across Canada. A low or falling number is bearish for the CA& and bullish for precious metals.
• USA EIA Natural Gas Storage Levels. A fall in stocks indicates inflationary pressures and continued supply chain disruptions.

Friday

• CAD Industrial Product Price. Measures price changes for major commodities sold by Canadian manufacturers. Indicates commodity inflation. A low reading is bearish for the CA$ and bullish for precious metals.
• USA Industrial Production. Measures the output of US factories and manufacturing. A high reading is seen as inflationary and bullish for precious metals prices.
• USA CFTC Net Gold Futures Positions. A reading of all gold futures positions. Measures future market sentiment.

Geopolitics

After Friday’s strong CPI release and reports that parts of Beijing are once again facing lockdown, Asian equity and currency markets are taking steep losses. There is a fear that the US Federal Reserve will hike interest rates more than expected when they meet this week. Currently, the US dollar is soaring against its major trading partners, with the Japanese yen at its lowest point versus the greenback in 24 years. Gold and silver are also slipping to start the week off as markets begin to price in the coming Fed rate hike.

Even with almost every central bank now pursuing a policy of increasing interest rates, it is going to take some time before inflationary forces start to abate. As long as supply chain disruptions, high energy prices and high housing costs persist, economies risk entering a period of stagflation. This remains a bullish environment for precious metals until real signs of falling inflation begin to manifest.

The Call

Precious metals will probably sell off ahead of the Fed interest rate hike on Wednesday. If the Fed raises rates more than expected, look for an extended sell-off in metals prices. If the rate hike comes in as expected, metal prices could regain losses sustained before the hike. Either way, there will probably be a lot of fireworks throughout the week.

Last Week in Review

• Precious metals were poised for a negative week until Friday CPI numbers showed strong inflationary pressures still exist at levels not seen since 1981 boosting Friday’s closing prices
• China warns the US a declaration of Independence by Taiwan will lead to war
• China announced that certain areas of Beijing to return to Covid lockdown
• Saudi Arabia is looking to build gold refineries in the kingdom as it aims to cut down on the amount of metal sent abroad for processing.

	Gold	Silver
Open	1851	21.93
High	1876	22.53
Low	1825	21.29
Close	1872	21.93