Issue 59 – The week of April 3rd, 2023

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

It’s the first week of the month and that means a slew of data is being released. The most important releases will be Canadian and US employment reports.  Normally these would be released on the first Friday of the month but this Friday is a holiday in Canada so the report will come out on Thursday.

Monday will see the US release the ISM PMI report. A survey of manufacturing expectations for economic activity and assessment moving forward. This report is a proxy measurement of anticipated inflationary volatility. The Bank of Canada will release their business outlook survey: a short-term business outlook survey was conducted with business executives. The Bank will use this data in deciding future interest rate policies.

Tuesday will be a light day with only Canadian building permits coming out which are expected to show a 1.6% rise compared to last month’s 4% loss.

Wednesday will see the precursor to the Friday employment report with the ADP payrolls release. Currently, the number is expected to be a +10 print, significantly lower than last month’s +242 print. This a sign the economy is slowing down which would be bullish for precious metals. Canada will see the release of International Merchandise Trade figures, the difference in C$ terms between imports and exports. Currently, a slight drop is expected which could be bearish for the CAD dollar but bullish for precious metals.

Thursday will be dominated by the Canadian employment report which is expected to show a decline in jobs compared to last month’s report. Again, looks to be bearish for the CAD dollar and bullish for precious metals prices. The unemployment rate is expected to remain unchanged for this report.

Friday the US employment release will be released and is expected to show a loss in job growth compared to last month’s strong job creation. Will likely be a moment of US dollar weakness giving strength to precious metals.

Geopolitics

The more things change the more they stay the same. The war in Ukraine still rages on. Russia still looks for ways to circumvent sanctions placed on the country by the international community. Supply chains remain stressed. Inflation pressures are making strong impacts on global food prices. OPEC has announced a surprise production cut today that sent ripples through the energy sector and currency markets, boosting the US dollar. This will weigh on FED watchers in their speculations of – will they or won’t they – raise interest rates again. All the financial boogeymen remain for the moment and yet the world seems not to be that concerned about how all these interconnected factors weigh on each other. Start pulling on a few loose threads and individual problems will begin to cascade into each other with some unpleasant effects.

The Call

The ducks are lining up in a row for precious metals to continue last month’s strong upward movement. Markets in general remain skittish due to ongoing inflation concerns and the possibility of future central bank hikes. As well, concerns remain about contagion within the retail banking sector globally. Gold will probably make another run for $2000 and silver trying to get a close over the $24.50. Certainly, the adage of buying the dip should be the call to action going forward.

Last Week in Review

• A bit of a mixed bag for precious metals prices last week. Silver managed a third week of solid gains with a brief push above the $24 handle before slipping back below. Gold on the other hand suffered a second week of losses unable to crack the $2000 handle.
• Friday was also the monthly closing session trading. Gold had an extraordinarily strong move-up during March. After opening at $1825 it climbed up to $2009 before finishing at $1968. Silver had an equally strong month as well opening at $20.87 then climbing as high as $24.15 slipping a sliver to $24.09 by the closing bell.
• BMO expects demand for physical gold to be strong over the next 3 months pushing the price above the $2000 handle as concerns about contagion in the banking sector continue.