Gold Continuous Contract (GC.F) * & Invesco India ETF (PIN)

We have now entered the summer months for the equity markets and from a seasonality perspective we typically see the first half of July being positive for equities followed by the second half of July into August weaker for the equity markets. In the past week, the US is continuing to show resilience as the S&P 500 is up 1.75%, while the Tech Heavy Nasdaq up 2.52%. The TSX Composite, however, has struggled somewhat and is up only 0.57% in the past week.

The most heavily watched story this week is Fed Chair Powell’s semi-annual testimony to congress on the economy and monetary policy. In Powell’s comments he reiterated they have made considerable progress in its fight against inflation as inflation has eased considerably in the past few years. He also reiterated more good data must materialize before he has confidence that inflation is moving sustainably toward the 2% target. But, of most interest, Powell did mention that the Job Market has cooled considerably, and economic growth has moderated. Chair Powell further commented that elevated inflation is not the only risk they face and that cutting interest rates too late or too little could unduly weaken economic activity and employment. With these comments, some market watchers are anticipating two interest rate cuts with the first occurring as early as the September meeting.

It has been a light week thus far for economic data points. On the US side, the Consumer Inflation report will be released later today and if a cooler reading is announced it may add further likelihood the first interest rate cut may happen in September. Earnings season kicks off on Friday with results due from several big banks and then ramps up next week. Also of note the Republican National Convention is also slated for next week. Here in Canada, the jobs picture is flashing some signs of concern as the June Employment report posted a surprise contraction falling by 1400 jobs dramatically falling short of consensus which was looking for a forecast increase of 25,000 jobs while the unemployment rate increased 0.2 percentage points to 6.4%. The consensus forecast was for a 0.1% increase. In commodity news, US crude oil stocks, including those in the Strategic Petroleum Reserve, declined by 3.0 million barrels in the week ended July 5 following a decrease of 11.8 million barrels in the previous week. Gold is up 1.48% for the week and Copper up 3.59% for the week as of Tuesday’s close. With the International Equity Asset Class increasing to the 3rd spot from 5th in SIA’s Asset Class Rank List last month, in this edition of the Equity Leaders Weekly, we are going to look at the one of Emerging International Markets by looking at the India Market using the Invesco India ETF (PIN) and we will also look at the Gold Continuous Contact (HG.F) to see what it is telling us about inflation, investor sentiment and capital flows.

Since we last talked about gold in the March 7th edition of the Equity Leaders Weekly, Gold has broken out further and charged higher to fresh all-time highs breaking past the previous resistance levels we noted at $2250 and $2320.There are a number of factors that contributed to this move to all time highs. Specifically, Gold has historically been a safe haven in times of turmoil. With ongoing political uncertainly around elections and wars, this has put a tailwind behind gold. As well, Gold has known to be a hedge against inflation. With Oil back above $82.00 investors may be starting to move capital back into Gold. Furthermore, cryptocurrency ETFs

has become an alternative asset class which competed with gold for capital. With cryptocurrencies such as Bitcoin down 16.62% for the last month and down 17.09% for the past quarter capital may be moving out of cryptocurrency and back into Gold as the preferred Alternative Asset Class creating another tailwind.In looking at the attached point and figure chart of Gold at a 1% scale (GC.F) we see the breakout that occurred in early March at the $2099.00 level. Since then, Gold had charged higher to its new all time high which is now near $2461.98. Recently the commodity has paused and a consolidation has commenced starting in May. What is interesting is Gold has found support twice at $2296.33 back in May and this month and a new column of rising X’s has materialized. It is currently at its 3-box reversal of $2413.47 which will act as near-term resistance. Next resistance above that, is the recent all time high at $2461.98 then $2613.44 based on a measured move. To the downside, support is at $2296.33 which it has already held twice before and, below that, $2251.09 which would be the 50% retracement level.With a bullish SMAX score of a perfect 10 out of 10, GC.F is showing strength against all the asset classes.

Emerging markets, by definition, have historically been seen by investors as being potentially more volatile than developed markets. Because of this, investor demand (or lack of demand) for emerging market equities has been seen as a barometer of investor appetite.

The India Economy has been strong of late. The Invesco India ETF (PIN) is up 17.01% over the last six months and 34.94% over the past year. According to the Reserve Bank of India, India has generated 46.7 million jobs in fiscal 2023-2024 taking the total jobs number to 643.3 million. The employment growth rate for this fast-growing economy stood at 6% in fiscal year 2024 against 3.2% growth rate the previous year underpinning the productivity of India’s economy.

In looking at the attached point and figure chart on a 1% scale, we see that the shares were in a sideways consolidation range between September of 2021 to November of 2023. Immediately afterwards, we see a decisive breakout to the upside in early December 2023 when the shares broke past $23.57.

Since then, a step pattern of higher highs and higher lows materialized with the shares continuing to make fresh all-time highs. Resistance is quickly approaching at $30.23 and, above that, $31.77. Support can be found at its 3-box reversal and previous high of $28.48, and below that, $26.56.With a bullish SMAX score of 10 out of 10, PIN is exhibiting strength against the asset classes.