Guardian Weekly Market Report 74

Issue 74 – The week of July 17th, 2023

Key Resistance and Supports: Upcoming Week

Reports of Note due out this week:

The U.S. Census Bureau will issue data on Retail Sales for June, offering a valuable update on consumer spending. Housing Market updates will also be released including Building Permits, Housing Starts and Existing Home Sales.

• Monday will see the release of the New York Empire State Manufacturing Index at 8:30 AM.
• Tuesday at 8:30 AM will see June Retail Sales figures which will provide a timely update on consumer spending followed by Industrial Production and Capacity Utilization at 9:15 AM. Rounding out the morning is Business inventories and Home builder confidence index at 10:00 AM
• Wednesday at 8:30 AM see’s the release of Housing Starts and Building Permits for June.
• Thursday, we see the Weekly Initial Jobless Claims in the US and the Philadelphia Fed manufacturing survey at 8:30 AM. 10:00 AM brings Existing Homes Sales and U.S. leading economic indicators.
• On Friday we have a quiet day with no economic indicators scheduled.

Geopolitics

 China’s central bank, the People’s Bank of China, continues to dominate the gold market, having bought 21 tonnes of gold in June, according to updated data. This marks the eighth consecutive month of gold purchases by China, with total gold reserves now reaching 2,113 tonnes. China’s consistent demand for gold is seen as a strategy to enhance the international credibility of its currency, the yuan, as well as part of a broader trend of global de-dollarization. Analysts believe that China’s gold-buying spree is just beginning, considering that it currently has the fifth-largest gold reserves globally. Central bank gold buying is providing support to the precious metal, as investors remain cautious. Other central banks, including the central banks of Uzbekistan, the Czech Republic, and Poland, have also been increasing their gold reserves.

India has implemented restrictions on the import of plain gold jewellery in an effort to address loopholes in its trade policy. The country, which is the world’s second-largest consumer of gold, has moved the import of gold articles from the free category to the restriction category, with the exception of imports under the India-United Arab Emirates Comprehensive Economic Partnership Agreement. The move comes as importers have been exploiting a flaw in the policy to source plain gold jewellery from Indonesia without paying import taxes. The new restrictions aim to close this loophole and ensure that the 15% tax on gold imports is properly enforced. The Ministry of Commerce and Industry has not yet commented on the matter.

Global finance ministers and central bank governors from the Group of 20 (G20) nations will convene in India next week to discuss various economic issues. The meeting will focus on increasing loans to developing countries from multilateral institutions, reforming international debt architecture, regulations on cryptocurrency, and a multilateral agreement on taxing conglomerates with cross-border operations. The ongoing conflict in Ukraine is also expected to be a topic of discussion. The meeting in Gandhinagar, Gujarat, will set the stage for a leaders summit in New Delhi in September. The discussions will be attended by senior officials from G20 member nations, including US Treasury Secretary Janet Yellen, the World Bank’s President Ajay Banga, and the IMF’s Managing Director Kristalina Georgieva. The meeting aims to address pressing economic issues and foster cooperation among member nations.

The Call

Unquestionably, gold has had an exceptional week closing in the 1955.00 area with silver even stronger closing around 25.00 after the release of Junes CPI and PPI numbers. On the flipside, the U.S. Dollar had a bad week closing under 100.00 for the first time since early 2022. Gold and Silver have broken out to the upside on the charts and look ready to test 2000.00 for gold and 26.50 on silver. There is still the expectation that the Fed will raise rates a quarter of a point at the July meeting and possibly another time before the end of the year trying to bring inflation down to 2%. This bump in interest rates should help the U.S. Dollar and weaken both silver and gold. We would think a move higher early in the week and then to move lower sometime near the 26th of July.

Last Week in Review

Gold opened the week at 1926 on Sunday evening and traded lower to the weekly low Monday morning of 1914.00. The rally started Tuesday and picked up steam after the CPI number on Wednesday morning which drove the breakout price to a high of 1961 by the close on Wednesday. Thursday’s PPI supported this rally and gold achieved the high of 1964 for the week. Friday saw some consolidation near the highs and gold closed out the week very strong as the US Dollar saw a sharp selloff.

Silver opened the week at 23.18 and followed golds moves until the CPI number Wednesday at which time it took off upwards leading the way higher with 3 up days. The high was 25.09 and silver settled around 25.00 an ounce for the week. Impressive!

• The U.S. Dollar Index sold off sharply to close out the week around 99.91 after being slightly lower on Thursday.
• The Gold/Silver Ratio closed out the week much stronger at 78.6 ounces of silver for 1 ounce of gold. A very impressive move!