Guardian Weekly Market Report 24

Issue 24 – The week of July 25th, 2022

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

Monday

• No reports of note today

Tuesday

• USA Consumer Confidence. The Consumer Confidence released by the Conference Board captures individuals’ confidence in economic activity. A high level of consumer confidence stimulates economic expansion while a low level drives an economic downturn. Generally, a high reading is also positive for the USD, while a low reading is negative. 
• USA New Home Sales. The number of New Home Sales released by the US Census Bureau is an essential measure of housing market conditions. House buyers spend money on furnishing and financing their homes so as a result the demand for goods, services and employees is stimulated. Generally, a high reading is seen as bullish for the USD, whereas a low reading is seen as bearish.
• USA Weekly Crude Oil Stocks. API’s Weekly Statistical Bulletin (WSB) has reported total U.S. and regional data relating to refinery operations and the production of the four major petroleum products: motor gasoline, kerosene jet fuel, distillate (by sulphur content), and residual fuel oil. These products represent more than 85% of the total petroleum industry.

Wednesday

• US Durable Goods. The Durable Goods Orders, released by the US Census Bureau, measure the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. As those durable products often involve large investments they are sensitive to the US economic situation. The final figure shows the state of US production activity. Generally speaking, a high reading is bullish for the USD.
• USA Federal Reserve Interest Rate Decision. With a pre-set regularity, a nation’s Central Bank has an economic policy meeting in which board members take different measures, the most relevant being the interest rate it will charge on loans and advances to commercial banks. In the US, the board of Governors of the Federal Reserve meets​ at intervals of five to eight weeks, in which they announce their latest decisions. A rate hike tends to boost the local currency, a sign of healthy inflation. On the other hand, a rate cut is seen as a sign of economic and inflationary woes and, therefore, tends to weaken the local currency. If rates remain unchanged, attention turns to the tone of the FOMC statement, and whether the tone is hawkish, or dovish over future inflation developments.

Thursday

• US Gross Domestic Product. The Gross Domestic Product Annualized released by the US Bureau of Economic Analysis shows the monetary value of all the goods, services and structures produced within a country in a given period. GDP Annualized is a gross measure of market activity because it indicates the pace at which a country’s economy is growing or decreasing. Generally speaking, a high reading or a better than expected number is seen as positive for the USD, while a low reading is negative.

Friday

• CAD Gross Domestic Product. The Gross Domestic Product released by Statistics Canada measures the total value of all goods and services produced by Canada. The GDP is considered a broad measure of Canadian economic activity and health. Generally speaking, a rising trend positively affects the CAD, while a falling trend is seen as negative (or bearish) for the CAD.
• USA CFTC Net Gold Positions. The weekly Commitments of Traders (COT) report provides information on the size and the direction of the positions taken, across all maturities, with participants primarily based in Chicago and New York futures markets. Forex trades focus on “non-commercial” or speculative positions, to determine whether a trend remains healthy or not, and market sentiment towards a certain asset.

Geopolitics

In what was the first piece of good news in 150 days since hostilities of the Russian assault on Ukraine began an agreement was achieved last week between the two nations to resume grain and fertilizer shipments from the Black Sea port of Odesa. This triggered a sell-off in the US$ and grain commodities. Precious metals were quick to rise on these falling markets.

Market eyes will now be waiting for this week’s Federal Reserve decision on interest rates. Most market participants expect the Fed to use the big guns and hike rates by one full percentage point, or 100 basis points, when they meet on Wednesday. This expected action is beginning to be priced into precious metals prices already.

The Call

Precious metals may slip ahead of the Federal Reserve interest rate announcement on Wednesday as the market’s price is in an anticipated rate cut. A rate cut that matches expectations will allow for further precious metals gain at the end of the week. If the rate hike is lower than expected precious metals will climb sharply higher as the market’s perception that the Fed isn’t doing enough to tackle inflation will only be reinforced. This week is particularly quiet for Canadian reports until Friday’s GDP report, so look for precious metals prices to be influenced by non-Canadian factors. Look for moderate precious metals gains by the end of the week.

Last Week in Review

• Precious metals were mixed last week with gold making some good gains and silver having a small loss.
• Ukraine’s central bank announced they had sold $12.4 billion worth of gold since the start of the war
• Canada’s inflation rate came in at 8.1% the highest level in 39 years
• The European Central Bank hiked interest rates for the first time in 11 years, from negative 0.5% to 0.0%
• Ukraine and Russia signed a deal to allow for the shipment of grains and fertilizer from the Black Sea port of Odesa. Hours later Russia attacked the port with missile strikes.

	Gold	Silver
Open	1710	18.74
High	1739	19.08
Low	1680	18.22
Close	1726	18.55