Guardian Weekly Market Report 81

Issue 81 – The week of September 4th, 2023

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

This week will be a holiday-shortended week with markets closed on Labor Day on Monday. Markets watchers can expect PMI surveys from S&P Global,the Institute for Supply Management(ISM) and the Fed’s Beige Book.

• Monday the market is closed for Labour Day.
• Tuesday is a very quiet day with just U.S. Factory orders  at 10:00 AM. 
• Wednesday see’s the release of the U.S. Trade deficit at 8:30 AM, S&P final U.S. services PMI at 9:45 AM, ISM services at 10:00 AM and finishes with the Fed’s Beige Book at 2:00 PM. Also out is China’s Trade Balance for August.
• Thursday we will get the Weekly Initial Jobless Claims in the U.S. at 8:30 AM along with revisions of U.S. productivity and Unit-labor costs for Q2. 
• Friday will be quiet with just Wholesale inventories coming out at 10:00 AM.
• Saturday China’s Consumer Price Inflation will be released.

Geopolitics

 Harmony Gold Mining, South Africa’s largest gold producer by volume, plans to seek board approvals for deepening its flagship Mponeng mine to extend its life. The company aims to extend depths beyond the current level of about 3.8 kilometers (2.4 miles) and believes it can do so safely. The Mponeng mine has been delivering strong performance, contributing to Harmony Gold’s rebound to an annual profit of $275 million from a net loss of $48 million the previous year. The move to extend the life of the world’s deepest gold mine is part of Harmony’s efforts to maximize returns from its mining operations in South Africa.

China has confirmed that Premier Li Qiang will attend the G20 summit in New Delhi, indicating that President Xi Jinping is likely to skip the event. This marks the first time that China’s top leader will miss a G20 summit. The move has raised questions and concerns, as it comes amid strained relations between China and India and a lack of high-level engagement between China and the United States. President Joe Biden expressed disappointment about not meeting with President Xi at the summit. It remains to be seen how this development will impact international diplomacy and global economic cooperation.

Central banks continue to show interest in gold as part of their foreign reserve management. The Monetary Authority of Singapore has been actively buying gold in 2023, adding 2 tonnes in July and totaling 73.6 tonnes for the year so far. Singapore is the second most active gold buyer this year, following China. Libya purchased 30 tonnes of gold in June, bringing its total official gold reserves to 147 tonnes, the highest level on record. Additionally, Qatar increased its gold reserves by 3 tonnes in July, reaching a total of 97 tonnes for the year. These moves reflect ongoing diversification and hedging strategies by central banks to safeguard their reserves.

The United States has expressed concerns about potential arms deals between North Korea and Russia, particularly in the context of the conflict in Ukraine. Intelligence suggests that arms negotiations between North Korea and Russia are advancing, which raises worries about weapons supplies from Pyongyang to support Russia’s war in Ukraine. The White House mentioned artillery munitions as a particular focus, given the ongoing conflict in Ukraine. The U.S. urged North Korea to cease these arms negotiations and warned of potential sanctions against individuals and entities facilitating such deals. These arms deals would violate several United Nations Security Council resolutions. Despite denials, the U.S. has previously accused North Korea of supplying munitions to Russia for its war effort in Ukraine.

The Call

Monday is a holiday this week and the rest of the weeks economic indicators are not major. The jobs numbers which were revised lower back to January 2023 and caused the unemployment rate to jump to 3.8% is bullish for metals. With Gold having a second week of respectable gains and following through to the upside with a close at 1966.00 basis December, we expect gold to trade towards the 2000.00 level, possibly as early as this week.

Last Week in Review

The Non-Farm Payrolls came out a little higher than expected on Friday at 187,000 which came in just above expectations of 170,000 but followed downward revisions in the previous months going back to January 2023. The unexpected jump in the unemployment rate from 3.5% to 3.8% was due to these downward revisions as the government paints a rosier picture than is happening. “The White House says Bidenomics are so successful the average American has twice as many jobs as they had two years ago”. The price of Gold opened up Sunday evening at 1917 spot and rallied most of the week to a high of 1953 only to slide lower after the non farm payrolls rally fizzles to finish at 1939.00.

Silver rallied to a high of 25.10 on Wednesday only to retreat back to where it started the week at the 24.20 level. 

• The U.S. Dollar Index was somewhat higher again this week and finished a little over the 104.15 mark.
• The Gold/Silver Ratio closed out the week at 80.3 ounces of silver for 1 ounce of gold.