Guardian Weekly Market Report 86

Issue 86 – The week of October 9th, 2023

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

Coming up this week we’ll get the latest inflation reports, with updates on the Producer Price Index and the Consumer Price Index on Wednesday and Thursday. The Fed minutes will also be released on Wednesday.

• Monday will be quiet with no scheduled releases.
• Tuesday at 10:00 brings the Wholesale Inventories for August.
• Wednesday we will see the Producer Price Index (PPI) for Sept. released. The PPI tracks inflation from the standpoint of manufacturers and wholesales. Producer prices are often viewed as a leading indicator of consumer prices, as manufacturers costs are eventually passed on to customers.
• Thursday, we will get the Weekly Initial Jobless Claims in the U.S.at 8:30 AM, and the Consumer Price Index (CPI) for September. Consumer prices are projected to have risen 0.4% last month and 3.7% from a year ago.
• Friday see’s the release of the Michigan Consumer Sentiment Index-Preliminary Reading for Oct. at 10:00 AM.

Geopolitics

The conflict between Gaza militants and Israel has escalated into a formal war, leaving hundreds dead on both sides. The attack by Gaza militants involved rockets, paragliders, and land, sea, and air infiltrations into Israel. Israel responded with airstrikes and declared a state of war. Over a thousand casualties have been reported. Notably, the fate of at least 100 hostages, including Israeli soldiers, remains uncertain. The violence comes after heightened tensions in the region throughout the year, with the number of casualties on both sides reaching levels not seen in nearly two decades. Israel and Hamas have a history of conflict, with Hamas rejecting peace talks and being designated as a terrorist organization by multiple countries. The situation remains volatile, with calls for de-escalation from some Arab nations and condemnation from Western states.

A recent report this week by the World Bank warns that many developing countries are facing a debt crisis due to the rippling effects of the pandemic and climate change. The report says that 35 low-income countries are at high risk of debt distress, and 12 are already in debt distress. The report calls for urgent action from creditors and donors to provide debt relief and increase financing for green and inclusive recovery.

Gold prices fell to their lowest level in seven months as the U.S. economy added more jobs than expected in September. The U.S. Bureau of Labor Statistics reported that 336,000 new jobs were created last month, beating the consensus forecast of 315,000. The unemployment rate also dropped to 3.8%, the lowest since February 2020. The strong labor market data boosted the U.S. dollar and raised expectations of an earlier tapering of the Federal Reserve’s stimulus program, which weighed on the precious metal’s appeal as a hedge against inflation and currency devaluation.

Russian President Vladimir Putin claims that Russia has successfully tested a nuclear-powered missile called ‘Burevestnik’, spiking fears that Russia could resume nuclear testing for the first time in decades. The missile is said to have unlimited range and can evade any defense system. Putin claimed that the missile is a response to the US withdrawal from the Intermediate-Range Nuclear Forces Treaty in 2019. He also said that Russia is ready to cooperate with other countries on arms control, but warned that it will not tolerate any threats to its security. The report also cited some experts who expressed doubts about the missile’s capabilities and environmental impact.

The Call

Guardian’s experts were looking at Gold to establish a lower trading range and hoped the low would hold the 1800.00 to 1820.00 area. This happened last week and faster than we expected. The U.S. Dollar made a high just above 107.00 on Tuesday and traded lower the rest of the week. A lower Dollar means that gold rallies as they usually travel in opposite directions. Gold has spiked higher as a safe haven asset on Sunday night as a result of the attack by Hamas on Israel this weekend. Our hopes and prayers go out to the innocent- people in Israel and Gaza in the Middle East. Our view on gold is stronger and suggests that gold will test the higher end of the range around 1900.00 over the next few weeks. 

Last Week in Review

Gold opened Sunday evening at 1864.40 spot and then traded a few cents higher before the selling resumed from last week. Gold found support at bit below 1820.00 and traded sideways until Friday morning where the low was made at 1808.70. A decent rally took gold up to close out the week at 1832.00.

Silver opened at 22.23 on Sunday evening and like gold the selling started immediately. Silver was lower through Friday morning until support was found at the 20.70 level and then rallied to close out at 21.60.

• The U.S. Dollar Index made another new high around 107.00 before weakening to close the week and at 106.10.
• The Gold/Silver Ratio closed a little weaker for the week at 84.9 ounces of silver for 1 ounce of gold.