Guardian Weekly Market Report

Issue 89 – The week of October 30th, 2023

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

This week will be a busy one with Central Banks around the world, including the U.S. Federal Reserve, Bank of England and the Bank of Japan meeting to discuss and set interest rates. Also, the latest updates from the labor market with the JOLTS survey, ADP’s National Employment Report and the Labor Department’s nonfarm payrolls report for October. Mixed in will also be the Case-Shiller National Home Price Index and the Gross domestic product (GDP).

Monday there are none scheduled.

Tuesday at 9:00 AM we get the S&P Case-Shiller home price index. followed by the Chicago Purchasing Manager’s Index at 9:45 AM. The Conference Board Consumer Confidence Index will be released at 10:00 AM. Tuesday is also the start of the FOMC meeting.

Wednesday, we start with the ADP National Employment Report for October at 8:15 AM. S&P U.S. manufacturing PMI at 9:45 followed by the Job Openings and Labor Turnover Survey (JOLTS) and ISM manufacturing and Construction spending at 10:00 AM. Then at 2:00 PM will be Day 2 of the FOMC Meeting with the Interest Rate Decision and Press Conference with Fed Chair Jerome Powell. The Fed is widely expected to hold its benchmark federal funds rate steady in a range of 5.25%-5.5%.

Thursday morning the Bank of England will come out with there Interest Rate Decision. We then get the weekly Initial Jobless claims at 8:30 AM. and Factory orders 10:00 AM. 

On Friday, U.S. nonfarm payrolls and the U.S. Unemployment Rate will be released at 8:30 AM. The U.S. economy likely added just over 170,000 jobs in October, after adding 336,000 in September. S&P U.S. services PMI is out at 9:45 followed by ISM services at 10:00 AM.

Geopolitics

In a climate rife with global unrest, the European Union’s emergency meeting over diesel supply shocks, ignited by the Israel-Hamas and ongoing Ukraine conflicts, shines a glaring spotlight on an already fragile energy sector. The meeting was more than a footnote; it was an alarm bell signaling the volatility in the geopolitics of energy supply. From fuel station queues stretching for miles to strikes paralyzing operations, the threat of a diesel supply crisis looms ever larger. Recent data shows that 90-day net imports of crude oil are in a precarious position, indicating heightened risks in the diesel and gasoil sectors.

Adding complexity to this volatile mix is OPEC’s decision to cut supplies, a move raising more than a few eyebrows across international markets. No one can afford to ignore the power Saudi Arabia wields as a major supplier. Current projections show that the market tightness, resulting from these supply cuts, isn’t expected to ease until at least 2024.  Let’s not forget the strategic importance of the Middle East as a critical oil route. The Strait of Hormuz acts as a significant chokepoint, and its vulnerability is heightened by the increasing naval presence of the U.S. and China in the region. Meanwhile, Iran adds fuel to the fire, quite literally, by staging war games involving attack helicopters and missiles, signaling support for its proxies in the region.

In the post-Ukraine invasion landscape, Russia’s absence in the global energy supply chain is sending shockwaves across markets, straining an already fragile balance. Newly minted House Leader Johnson hasn’t minced words, labeling Russia, China, and Iran as the “Axis of Evil” and highlighting what he sees as a trilateral threat against U.S. interests. This comes on the heels of weeks of GOP infighting over the election of a new House Speaker.

Ongoing conflicts in Ukraine and Israel complicate the geopolitical chessboard. The ripple effects of these conflicts are leading to growing instability in strategic locations like Taiwan, the Philippines, and the Baltic states. With a proposed $105 billion earmarked for military and border security, the GOP is signaling a fragmented approach, choosing to tackle various issues with separate bills.

Turkey’s Erdogan has added yet another layer to the complexities, labeling Israel a “War Criminal” state and canceling a planned trip to the country. The enormous pro-Palestinian rally in Istanbul and his subsequent remarks amplify the anti-Israel sentiment in the region. Meanwhile, critics argue that the West’s divergent stances on the Gaza and Ukraine-Russia conflicts reveal a double standard.

Domestically, the U.S. isn’t immune to the polarizing effects of these crises. A protest in New York organized by the left-wing group Jewish Voice for Peace led to over 300 arrests and chants of “Cease fire now” and “Let Gaza live.” Public transport was significantly disrupted as more than 1,000 protesters spilled from terminals onto the streets.

In summary, we’re steering through a complex maze of energy concerns, geopolitical skirmishes, and polarized public sentiment. While the road ahead is anything but clear, what remains undeniable is the impact of today’s decisions on tomorrow’s stability. Navigating these choppy waters requires a multi-pronged approach, and the clock is ticking. The question isn’t just who will step up to lead the way toward peaceful resolutions, but when.

The Call

Geopolitical tensions are rising in the world with Phase 2 of Israel’s war with Hamas escalating with the invasion of some ground forces. The bombing of Gaza has been nonstop since October seventh and a ceasefire is nonexistent so far. Combined with Russia and Ukraine fighting and tensions between China and the United States and Hezbollah skirmishes with Israel increasing, it is no wonder the Gold price is continually moving higher. With no real solutions to these problems, we should continue to see investors move into safe haven assets like Gold and it would not be unreasonable to think Gold could trade at new records highs in the very near future.

Last Week in Review

Gold opened Sunday evening at 1978.00 spot and then traded in a range between 1955.00 and 1995.00 before rallying Friday afternoon to reach the high of 2010.00 and closing at 2006.90. The buying continued as the war between Israel and Hamas in the Gaza Strip raged on.

Silver opened at 23.40 on Sunday evening and traded sideways to lower  as the week went on, hitting its low on Thursday at 22.45. A small rally on Friday took Silver back to 23.13 an ounce.

• The U.S. Dollar Index finished the week higher at 106.58.
• The Gold/Silver Ratio closed a little stronger for the week at 86.9 ounces of silver for 1 ounce of gold.

	Gold	Silver
Open	1978.30	23.39
High	2010.30	23.40
Low	1955.10	22.45
Close	2006.90	23.14