Issue 43 – The week of December 5th, 2022

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

Wednesday

• The most significant report out this week is going to be the decision by the Bank of Canada on its interest rate policy. Given how inflationary pressures are only in the last month showing signs of abating, it is highly unlikely that the Bank leave rates unchanged. A much more likely scenario is that rates are hiked by 25 basis points as they begin to slow down the size of previous hikes. Their concern is to allow the economy to continue to recover but keep inflation in check. Still a perilous tightrope to walk at this moment. A 25-point hike will be good for precious metals in Canadian dollar terms signaling to the market that rate hikes are slowing and could cease going into the new year.

Geopolitics

With the implementation of a $60 per barrel price cap on Russian oil and OPEC production cutbacks, precious metals have benefited along with energy prices.

As winter becomes fully set in Ukraine the fighting has moved into a moment of stalemate. Both sides will be looking to regroup and resupply for the next set of battles that will most likely come in the new year. This conflict is far from resolution. Look for the Russians and Chinese to continue pursuing alternative payment processing that circumvents traditional western systems.

The US Senate election in Georgia is going to decide if the democrats have a majority hold or if Vice President Harris will have to cast her vote as a tiebreaker. The run-off election will be held on Tuesday.

The Call

After last week’s upward precious metals price movement and strong weekly close, sentiment has taken on a bullish aspect after moving to a five-month high.

As December progresses, markets will become thinner as participants take the end-of-year holidays. As the World Cup has now entered the knockout stage, there are other distractions to occupy traders’ attention.

It is vitally important for gold to hold above $1800 throughout December. Doing so can set it up to make significant moves higher in the new year.

Investors should be in a ‘buy the dip’ frame of mind going forward. Looks like higher prices will soon be a reality.

Last Week in Review

• Precious metals prices surged higher last week amid rising oil prices and weaker-than-expected US job gains.
• It was announced that central banks added 31 tonnes of gold to their reserves in October
• Gold’s 7% rally in November was the strongest move since May 2021