Issue 31 – The week of September 12, 2022

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

Monday

• No reports of note

Tuesday

• 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. Stocks down are good for precious metals.
• 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.

Wednesday

• USA Producer Price Index. The Producer Price Index released by the Bureau of Labor Statistics, Department of Labor measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).

Thursday

• USA Retail Sales. The retail Sales released by the US Census Bureau measure the total receipts of retail stores. Monthly percent changes reflect the rate of changes in such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish).

• CAD ADP Employment Change. The Employment Change released by Automatic Data Processing, Inc is a measure of the change in the number of employed people in Canada. 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 CAD, while a low reading is seen as negative, or bearish.

Friday

• USA Michigan Consumer Confidence. a survey of personal consumer confidence in economic activity. It shows a picture of whether or not consumers are willing to spend money. Generally speaking, a high reading anticipates positive (or bullish) for the USD, while a low reading is seen as negative (or bearish).
• 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

Some weeks seem to take years to pass and some weeks have years pass in seven days. We have just seen the latter. The UK has a new prime minister and a new sovereign. That in itself is a lot to digest. The military manoeuvres by Ukrainian forces this week have completely befuddled the Russians and they have been able to recover thousands of kilometres of territory.

Inflation in the UK is nowhere near being tamed and the Bank of England has put off its interest rate decision scheduled for this week until after the funeral of Queen Elizabeth II. The new PM is set to introduce a cap on energy bills in 2023. Overall taxpayers will be on the hook for payment to energy companies but not individual energy consumers.

In China, approximately 65 million people in 33 cities remain under full or partial lockdown due to the zero Covid policy there. Manufacturing and supply chains continue to be adversely impacted by these conditions.

The Call

Precious metals managed to have a strong close last week but if the rally is going to continue with any momentum the markets will look for lower-than-expected prints in two key inflation reports this week. The consumer price index (CPI) and the Michigan Consumer Sentiment report from the US are both key indicators of inflationary readings. Low prints will give precious metals a serious boost taking them into new areas of technical support. High prints will weigh on them like a chain around their neck. Gold needs a weekly close above the 1750 handle or it will languish fighting to keep above 1700. Persistent US dollar strength continues to be detrimental to precious metals prices as it acts as a safe haven for the moment.

Last Week in Review

• Precious metals staged a late-week rally to finish with some solid gains by the end of trading last Friday
• The US imposed a 10-year ban on tech firms that receive federal funding from investment in China as they want to boost their faltering chip industry
• Russia starts buying artillery shells from North Korea
• Chinese city Chengdu has lockdown extended indefinitely
• Bank of England postponed interest rate announcement following the death of Queen Elizabeth II until September 22
• Despite strong military gains by Ukrainian forces Europe’s largest nuclear plant Zaporizhzhja has shut down and remains besieged

	Gold	Silver
Open	1707	17.93
High	1729	18.99
Low	1691	17.83
Close	1718	18.92