Issue 33 – The week of September 26th, 2022

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

Monday

• No reports of note

Tuesday

• USA 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. A high reading is bullish for the USD.
• USA Consumer Confidence. The Consumer Confidence released by the Conference Board captures the level of confidence that individuals have 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 important 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

• No reports of note

Thursday

• USA 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 each period. GDP Annualized is a gross measure of market activity because it indicates the pace at which a country’s economy is expanding or contracting. A high reading or a better-than-expected number is seen as positive for the USD, while a low reading is negative.
• 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. A rising trend has a positive effect on the CAD, while a falling trend is seen as negative (or bearish) for the CAD.

Friday

• USA Michigan Consumer Confidence is a survey of personal consumer confidence in economic activity. It shows a picture of whether consumers are willing to spend money. 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 market sentiment towards a certain asset.

Geopolitics

The new government in the UK has unveiled a mini-budget slashing taxes alongside an increasing expected surge in borrowing, i.e., printing money. The pound has fallen to its lowest level against the US dollar since the pound converted to decimalization in 1971. This has stoked recession fears and negates last week’s interest rate hike.

More and more, global price hikes seem to be more a policy of increased corporate earnings. This is best reflected in energy prices which have fallen significantly in the past few months. At the time of writing crude oil is trading at $78 a barrel. Yet this fall in price has failed to transfer to pumps that we all use each day. Continued interest rate hikes will be ineffective against this kind of artificial inflation. There are still significant supply chain issues like lockdowns in China, backlogs at US ports and shifting economic alliances. Yet if one looks at massive increases in corporate profits it is obvious to see that cost adjustments are not being passed through to retail customers.

The Call

It’s probably going to be a rough week for precious metals. Currencies continue to be on the ropes versus the US dollar. Treasury yields keep rising. Strangely two places where gold especially is in retail demand are China and India. This is going to be a longer-term factor in the price. Indian demand for physical gold is expected to outpace that of China soon.

Several analysts suspect gold prices are close to running their course to the downside and a year-end close of $1800 is possible. Look for losses to slow down and rhetoric that gold may plunge to pick your time to start bottom picking up bargains.

Last Week in Review

• Precious metals suffered a rough week with interest rate hikes from both the Fed and the Bank of England
• Gold prices in China surge as demand for physical gold soar selling for as much as $43 an ounce higher than international prices

	Gold	Silver
Open	1677	19.60
High	1687	19.91
Low	1639	18.76
Close	1643	18.84