Issue 37 – The week of October 24th, 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 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.
• USA Consumer Confidence. The Consumer Confidence released by the Conference Board captures the level of confidence that individuals have in economic activity. An elevated level of consumer confidence stimulates economic expansion while a low level drives an economic downturn. A high reading is also positive for the USD, while a low reading is negative. 
• 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

• 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, in turn stimulating the demand for goods, services and employees. A high reading is seen as bullish for the USD, whereas a low reading is seen as bearish.
• CAD Bank of Canada Monetary Policy Report. The Bank of Canada publishes a study of economic movements in Canada. It indicates a sign of a new fiscal policy. Any changes in this report tend to affect the CAD volatility. If the BoC report shows a hawkish outlook, that is seen as positive (or bullish) for the CAD, while a dovish outlook is seen as negative (or bearish).
• CAD Bank of Canada Interest Rate Decision. The Bank of Canada announce the BoC Interest Rate Decision. If the BoC is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the CAD. Likewise, if the BoC has a dovish view on the Canadian economy and keeps or cuts the ongoing interest rate, it is seen as negative, or bearish

Thursday

• 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 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. 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 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.
• USA Michigan Consumer Confidence. 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 Congress of the Chinese Communist Party has officially anointed Xi Jinping to a third term as party leader. The most striking moment of this was when former leader Hu Jintao, who was seated beside Xi, was physically escorted from the Congress floor. Let us speak plainly. There is a new emperor in China.

Things in eastern Ukraine look increasingly like they are about to become a very scary global situation. The appointment of a new military commander with previous experience in Syria, a nasty reputation, and orders for Russian civilians to evacuate the area of Kherson is a sure sign of escalation of the conflict. Military analysts are concerned about the language used by Russian military officials and Russian political pundits. There is speculation that the escalation could be a prelude to the Russian use of chemical weapons or even tactical nuclear weapons. Ukrainian gains on the battlefield are a huge concern for Putin and he is prepared to do whatever is necessary to change the flow of battle. This could expand the number of players in this conflict and would further upset supply chains and strain international relations.

The political situation in the UK continues to disintegrate. Presently the conservative party is entering into their second vote for a party leader within the last two months. Voting for a new leader who de facto gets to move into 10 Downing Street is not a winning plan for gaining public trust. Unsurprisingly the markets are reacting by selling off the Pound. The economy is faltering, and a general election is desperately needed. (should this happen, this writer thinks the conservative party will suffer their worst defeat ever). Let us see what happens this week.

The Call

Lots of potential for volatility in precious metals prices this week from both geopolitical and economic-reports perspectives. Crosscurrents could create further turbulence in markets.

The US dollar’s relentless drive higher is poised to encounter some headwinds the closer the calendar gets to the US midterm elections. Any moment of profit taken from long dollar positions will by default benefit precious metals positions.

For the moment precious metals are swimming against the current to make significant gains but the tide is shifting. These are looking like a buyers’ moment.

Last Week in Review

• Precious metals took a beating for most of last week before staging a rally in the final NY session of the week with silver having a stronger showing than gold
• Xi Jinping was confirmed for a third term making him the only person since Mao Se Dong to be in power that long.
• Liz Truss resigns as UK PM and Boris Johnson signals that he will not run for the position again

	Gold	Silver
Open	1647	18.38
High	1670	19.67
Low	1617	18.21
Close	1661	19.46