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Issue 84 – The week of September 25th, 2023

Key Resistance and Supports: Upcoming Week

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SupportResistance
1900.001960.00
1860.002000.00
1836.002024.00
1800.002024.00
Gold
SupportResistance
23.0724.00
22.4024.58
21.8625.20
20.8725.60
Silver

Reports of Note due out this week:

Coming up this week we have the latest home prices in the U.S., along with new and pending home sales for August. On Friday the Feds preferred inflation gauge, the Personal Consumption Expenditures Price Index will be released. Fed Chair Jerome Powell will hold a town hall-style event with educators on Thursday.

  • Monday we have no major economic reports scheduled.
  • Tuesday at 8:30 AM. we have New Home Sales released. At 9:00 AM the S&P Case Shiller home price index (20 cities) followed by Consumer Confidence Index at 10:00 AM. 
  • Wednesday we will get the Durable-goods orders for August at 8:30 AM.
  • Thursday, we will get the Weekly Initial Jobless Claims in the U.S.at 8:30 AM, followed by the U.S. Gross Domestic Product- Final Reading (Q2 2023), Real Consumer Spending, Corporate Profits and Pending Home Sales.
  • Friday the Bureau of Economic Analysis (BEA) will issue the latest Personal Consumption Expenditures (PCE) Price Index-the Fed’s preferred inflation gauge for August. Prices are projected to have risen 0.5% last month, up from July’s 0.2% gain.

Geopolitics

The United States is on the brink of a government shutdown starting on October 1 if Congress can’t pass funding legislation. A government shutdown occurs when Congress fails to agree on funding bills that the president can sign into law. This results in the suspension of non-essential government work and delayed paychecks for federal employees. The duration of a shutdown is uncertain, with political divisions and demands for spending cuts potentially prolonging it for weeks or longer. The impact of a government shutdown would be widespread, affecting millions of federal workers, including military personnel and civilians. Government services such as clinical trials, firearm permits, and passport applications could face delays. The travel sector could lose $140 million daily, and financial markets may be rattled. While the president and Congress members will continue to work and receive pay, non-essential staff may be furloughed. Court cases, congressional work, and presidential pay will continue. A shutdown could have far-reaching effects on public confidence in government functioning.

Screenwriters in the Hollywood have reached a tentative deal with studio executives after nearly five months on strike. The Writers Guild of America (WGA) described the deal as “exceptional” with significant gains and protections for writers. However, the final decision lies with WGA members. The strike, which began on May 2, has had a major impact on Hollywood, halting most film and TV production. It’s the longest strike in decades and has cost the California economy billions of dollars. While details of the deal are yet to be finalized, the WGA has suspended picketing. Actors, who are also on strike, have yet to reach a deal.

The United States is reportedly in talks with Saudi Arabia to normalize relations with Israel in exchange for a U.S. defense pact and assistance in developing a civilian nuclear program. These complex negotiations are progressing, with growing optimism from officials on all sides, and could have a transformative impact on the Middle East. Recognizing Israel would represent a significant shift in Saudi Arabia’s position and could also be a diplomatic success for the Biden administration. However, numerous challenges remain, including the Israel-Palestine conflict and domestic political considerations in the U.S. and Israel. If a deal materializes, it’s expected to happen in early 2024. This development is seen as a response to both regional tensions and China’s expanding influence in the Middle East.

The invitation for Argentina to join the BRICS grouping is generating mixed reactions. While government officials from Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates are likely to accept, Argentina’s response is uncertain due to its upcoming presidential elections. Javier Milei, a far-right candidate leading the polls, has strongly criticized the BRICS, especially China. His rival, Patricia Bullrich, also expressed skepticism, citing the Ukraine conflict and Argentina’s unresolved issues with Iran. Milei’s potential victory could lead Argentina to become the first country to decline a BRICS invitation. Despite the debate, some argue that BRICS membership could help Argentina balance its foreign policy in a multipolar world and enhance trade opportunities, especially with China and Brazil.

The Call

Gold is still stuck range bound. 1900.00 on the bottom and 1980.00 on top. The direction of gold next week will be highly influenced by pending legislation by Congress to fund the government which will run out of funds on Friday. If it seems as though there is a high probability that congressional legislators are unable to agree on a budget, that would create a bullish situation for gold and a rally back towards the high of the range. If they can come to an agreement and pass legislation before the deadline, we could see gold trading lower towards the bottom of the range or breaking lower towards 1850.00.

Last Week in Review

The price of Gold opened Sunday evening at 1925.50 spot and then traded higher to 1948.50 to hit the high for the week on the release of the Federal Reserves interest rate decision on Wednesday afternoon. The Fed reiterated its view of a stronger economy than expected, and the likelihood that interest rates would stay higher longer than the market wants to believe. The markets then slid into Thursday. Stocks globally, bonds, commodities across the board, including precious metals. On Friday, a bit of a return to reality in markets with a recovery after Thursday’s spastic sell off. We made the low of 1912.90 before a small bounce took gold back close to unchanged for the week at 1924.80.

Silver opened at 23.10 on Sunday evening and made lower lows and higher highs into Friday and settled at 23.60 after making the weekly high of 23.82 Friday afternoon.

  • The U.S. Dollar Index made a new high at 105.78 for the week and settled at 105.58.
  • The Gold/Silver Ratio closed stronger for the week at 81.8 ounces of silver for 1 ounce of gold.
GoldSilver
Open1925.5023.10
High1948.5023.82
Low1912.9022.83
Close1924.8023.60
Last Week’s Gold and Silver Ranges

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The information contained in this report is intended to provide market commentary and not as a recommendation or as a basis for investment decisions. The views expressed herein are the author’s and may differ from the views of others at Guardian International Gold. Guardian International Gold is a trader of Precious metals and this communication is to be considered an invitation to trade. Guardian International Gold makes our best effort to communicate reliable information but no express or implied warranty or representation as to its accuracy, completeness, or correctness may be taken.

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