Issue 70 – The week of June 19th, 2023

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

This week will be a shortened trading week, with U.S. markets closed on Monday for the Juneteenth holiday. We’ll get the latest updates on the housing market, including building permits and housing starts for May, and the NAHB’s Housing Market index for June. On Wednesday and Thursday, Federal Reserve Chair Jerome Powell will testify before congress, as part of his semi-annual testimony on monetary policy. On Friday, S&P Global will release its latest Purchasing Managers Index (PMI) reading for June.

• Monday the market is closed for Juneteenth holiday.

• Tuesday at 8:30 AM the U.S. Census Bureau will report on the H May Housing Starts and Building Permits, a proxy for home construction and overall supply.

• On Wednesday, Fed Chair Powell testifies to House panel at 10:00 AM

• Thursday, we see the Weekly Initial Jobless Claims in the US at 8:30AM. Existing home sales along with U.S. leading economic indicators at 10:00 AM.  Fed Chair Powell testifies to Senate panel.

• Friday we see S&P flash U.S. services PMI and flash U.S. manufacturing PMI.

Geopolitics

Mexico is taking action to address the growing number of asylum seekers by introducing an app that aims to streamline the asylum process. This stands in contrast to the United States, where a similar app has faced criticism due to technical glitches and user difficulties. The upcoming app, known as the “pre-registration system,” will enable individuals to electronically register their intent to seek asylum. It is set to launch next week, initially in Mexico City, with plans for expansion to other regions in the future. The director of Mexico’s refugee assistance agency, COMAR, emphasized the app’s necessity in managing the overwhelming volume of asylum applications in Mexico City. In May, the number of applications in Mexico City surpassed those in Tapachula, a city on the southern border. This surge can be attributed to the end of Title 42 in the United States, which led to an influx of people to Mexico with hopes of crossing the US-Mexico border. Additionally, the Biden administration’s new rule, which prevents most asylum-seekers who traveled through other countries from gaining protection in the US, has contributed to the increase.

Cyclone Biparjoy made landfall along the coasts of India and Pakistan, resulting in heavy rainfall and strong winds. This cyclone represents the most severe one in the region in the past 25 years, posing a significant threat to homes and crops. Prior to the cyclone’s arrival, over 170,000 individuals were successfully evacuated as a precautionary measure. In India’s Gujarat state, where the cyclone caused extensive destruction, there have been at least two reported fatalities and 22 injuries. Pakistan’s coastal regions experienced flooding due to high sea levels, although most of the population had already been relocated to safer areas. While the cyclone’s strength diminished after reaching land, Rajasthan state in India is still expected to receive additional rainfall.

US Secretary of State Antony Blinken has embarked on the US’s first visit to China in five years, aiming to improve the strained relations between the two countries. During his visit, Blinken engaged in over seven hours of talks with China’s Foreign Minister, Qin Gang. The US described the discussions as “candid, substantive, and constructive.” However, Qin stated that the US-China relationship is currently at its lowest point since diplomatic ties were established, highlighting Taiwan as the most crucial and sensitive issue. In response, Blinken emphasized the importance of diplomacy and open communication to prevent misunderstandings and miscalculations. He also raised concerns about human rights, trade, and the fentanyl crisis. There is a possibility that Blinken will meet China’s top diplomat, Wang Yi, and potentially even President Xi Jinping on Monday, although no official confirmation has been given yet. A meeting with President Xi would hold significant symbolic value and could potentially pave the way for a future summit between President Biden and President Xi.

A tragic boat accident in the Mediterranean Sea has claimed the lives of over 300 Pakistani migrants attempting to reach Europe, according to Pakistan’s Senate chairman Muhammad Sadiq Sanjrani. The boat, carrying approximately 750 individuals, capsized off the coast of Greece last week, marking one of the most devastating incidents within the EU’s refugee crisis. In response to the tragedy, Pakistan’s Prime Minister Shehbaz Sharif has initiated an inquiry into the incident and declared a national day of mourning on Monday. The exact cause of the sinking remains unclear; however, authorities have indicated that the boat was overcrowded and in a state of disrepair. Greece serves as one of the primary entry points for migrants and refugees seeking refuge from conflicts and impoverished conditions in their home countries. The European Union has been grappling with the challenge of managing the influx of people and preventing further loss of life at sea.

Recent developments have unfolded in the Ukraine war, where Ukrainian forces are engaged in a counter-offensive against Russian-backed forces. According to a minister in Kyiv, Ukraine’s counter-offensive has resulted in further territorial gains and intense battles. Russia argues that the Ukrainian military maneuver is unsuccessful, while the head of the NATO military alliance suggests that it is still too early to judge the outcome. The Ukrainian side claims to have recaptured seven settlements and an area of at least 90 square kilometers since launching the offensive early last week. The Kremlin has expressed concern following unconfirmed reports of an injury to a senior Chechen commander who played a prominent role during the invasion.

The Call

Equity markets continued rallying last week as the Federal Reserve paused on raising interest rates. The U.S. Dollar retreated and with the pause on rates this is to be expected. If August Gold can close above 1984.00 and July Silver above 24.22, we will likely get a rally higher on gold to test the 2000.00 – 2050.00 price tag and Silver in the neighbourhood of 25.00 – 26.00. This pause in rates is bullish for the metals and a breakout higher should take us towards the highs. Volatility is again the call of the week!

Last Week in Review

• Gold opened the week at 1963 and had a trading range from a low of 1924 up to the high of 1973. Gold spent the week consolidating again with a two-week range of 1924.00 to 1985.00. Gold closed out the week basically unchanged at 1958.00.

• Silver opened the week at 24.34 and dipped down to the low of 23.23 Thursday morning. Silver then rallied to closed out the week at 24.23. Consolidation continues.
• The U.S. Dollar Index sold off this week to close at 102.30 from a close of 103.55.
• The Gold/Silver Ratio ended the week at 81.0 ounces of silver for 1 ounce of gold .

• The Federal Reserve on Wednesday decided against what would have been an eleventh consecutive rate hike as it measures what the impacts have been for the previous 10. But the decision by the Federal Open Market Committee to hold off on a hike at this two-day  meeting came with a projection that another two quarter percentage point moves are on the way before the end of the year.

• The Central Bank of Turkey reported a decline in its official gold reserves to 491tons.Based on published data and in-market conversations, this selling was a domestic issue rather than a change in their long-term gold policy. The gold was sold to satisfy very strong bar, coin and jewellery demand following a temporary partial ban on gold bullion imports.

	Gold	Silver
Open	1963	24.34
High	1973	24.47
Low	1924	23.23
Close	1958	24.23