Issue 29 – The week of August 29th, 2022

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

Monday

• No reports of note

Tuesday

• US Redbook index. A private analysis of retail sales is used to help verify government retail sales reports. Strong sales are a sign the economy is healthy but could put upward pressure on inflation is bullish for precious metals.
• US API weekly crude oil stocks. A measure of economic demand-supply chain efficiency. Falling stocks show high demand and/or supply chain disruptions. This would be bullish for precious metals.

Wednesday

• USA ADP Employment Change. The Employment Change released by the Automatic Data Processing, Inc, Inc is a measure of the change in the number of employed people in the US. Generally speaking, a rise in this indicator has positive implications for consumer spending, stimulating economic growth. So a high reading is traditionally seen as positive, or bullish for the USD, while a low reading is seen as negative, or bearish.
• CAD Gross Domestic Product. The Gross Domestic Product released by Statistics Canada is a measure of 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 has a positive effect on the CAD, while a falling trend is seen as negative (or bearish) for the CAD.

Thursday

• CAD S&P Global PMI (Purchasing Managers Index) Markit Manufacturing PMI, is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 industrial companies. An index reading above 50.0 indicates an overall increase in that variable, below 50.0 an overall decrease. All data are seasonally adjusted.

Friday

• USA Nonfarm Payrolls. The nonfarm payrolls released by the US Bureau of Labor Statistics presents the number of new jobs created during the previous month, in all non-agricultural business. The monthly changes in payrolls can be extremely volatile, due to their high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility in the forex board. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish), although previous months’ reviews ​and the unemployment rate are as relevant as the headline figure, and therefore market’s reaction depends on how the market assets them all.
• 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 also market sentiment towards a certain asset.
• 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 also market sentiment towards a certain asset.

Geopolitics

Global markets, except for the US dollar, have all sold off in the wake of the Federal Reserve statement from their annual Jackson Hole meeting. The bloodletting continues this week. The Fed will maintain its hawkish stance until inflation returns to lower levels which is still going to take some time to accomplish. They have now made it clear that they going to use interest rates as their main weapon to attack inflation.

The Call

Precious metals will face sustained downward pressures this week. The big report out this week is the US employment report but markets will be focusing on the September Fed interest rate announcement. Will it be a 50 basis point hike or 75 basis points? The interest rate announcement will come out on September 21. For the moment the greenback is king at the expense of precious metals and equities.

Last Week in Review

• Precious metals suffered a strong sell-off as The US Federal Reserve indicated that future interest rate hikes are a certainty
• China imported $108.8 million worth of Russian gold in July
• California approves a plan to ban the sale of gas-powered cars by 2035. All those new electric car batteries will need a lot of silver.

	Gold	Silver
Open	1745	18.98
High	1765	19.42
Low	1727	18.70
Close	1737	18.85