top of page

September Market Minute

Gold Review and Outlook

Through Q3 to date gold has averaged just over $1930, which is slightly higher than our latest baseline projection of $1915 for Q3 and $1916 for Q4. We are happy that gold has done as well as it has; the dollar has been surging and TIPS yields have set a new high for this cycle!

The gold price could average higher than forecast again in Q4, but this will depend on the Fed. If the Fed has truly stopped hiking for this cycle (which we think it should do on account of the danger the economy will underperform expectations) then gold should move somewhat higher over the remainder of the year.


Russia and China aired their grievances against Western powers, present themselves as defenders of developing economies and set out the case for an alternative international order at the BRICS summit on August 22-24. BRICS countries were originally bracketed together by the clip of their economic growth – the BRICS nations now account for more than a quarter of the global economy and some 42% of the world’s population. But the group’s size is matched by the scale of its disunity on political and security issues—including relations with the U.S. The five countries also represent vastly different governing systems and ideologies. Any expansion could widen that division. ... China and Russia set out the case for strengthening the BRICS capabilities as a political entity and independent trading bloc, part of an effort to boost its clout as a counterweight to the West (WSJ, 08/23).

Although the five countries that currently makeup the BRICS bloc (Brazil, Russia, India, China, South Africa) are somewhat divided on expansion, the group invited six countries to join during the summit: The five-nation group of emerging economies known as BRICS ... has invited six more countries to join — most of them from the Middle East — during its summit in Johannesburg. The choices by the current members ... contained a few surprises, the biggest being the addition of Iran, which joined three other Middle Eastern states: Saudi Arabia, the United Arab Emirates and Egypt. Argentina and Ethiopia rounded out the half-dozen nations tapped for inclusion, while Indonesia, which was thought to be among the top candidates for admission, did not make the cut (New York Times, 08/24).

Middle Eastern countries, especially Iran have deepened their economic, political, and military relationships with Russia and China over the past several years. And there is little doubt that the inclusion of these new countries in the BRICS will increase tensions with the West. The inclusion of Saudi Arabia and the United Arab Emirates, two large energy suppliers, have been long time US allies and have relied on the United States for protection. But these countries have also become discontent with the partnership and restrictions the US has placed on them – notably on their relationships with Iran and Syria, and the heavy-handed enforcement of sanctions the US has placed on countries because of the war in Ukraine.

Markets - Fed Review and Outlook

The S&P 500 index declined by 1.8% in August. All the sectors, except for the energy sector, declined. The TSX index declined by 1.6%, but the sector performance was mixed with four of the eleven sectors ending the month higher. The S&P 500 index is still up 17.4%, and the TSX index is up 4.7% year-to-date.

Investor sentiment deteriorated over the month with bearish sentiment (35.9%) outpacing bullish sentiment (32.3%). In addition to equity markets entering the seasonally weak months, there are several other factors weighing on equity markets. Three of these factors are higher oil prices, rising yields, and a rising US dollar. Longer term yields are rising as higher oil prices and demands for higher wages have increased fears that inflation could stay higher for longer than previously anticipated. Higher inflation will keep central banks on a path of further interest increases.

Federal Reserve Chair Powell is particularly adamant that the Federal reserve will keep interest rates elevated until inflation is back to its 2% target. The higher interest rates in the US relative to other countries has increased the value of the US dollar in relation to most currencies. Although a stronger dollar is good for companies that export, it hurts the earnings of companies that import raw materials due to the higher cost of the materials. Over time a strong dollar will also reduce the competitiveness of US export companies as it makes US products more expensive relative to other countries products.

Our view is that equity markets are likely to continue to face headwinds over the next several months as central banks waffle on further interest rate increases. Our baseline forecast calls for the Bank of Canada and the Fed to hold interest rates at current levels until mid-2024, when central banks will start lowering rates to combat weak economic growth. However, if economic data is strong (especially labour market data) we cannot rule out the Fed and even Bank of Canada increasing interest rates one more time before year-end.

Canada - Outlook

The gauges below provide a snapshot of our outlook for the Canadian economy over the next 3 to 6 months. Economic activity this year-to-date has been stronger than expected but we still expected it to weaken in coming quarters. The probability of recession in early 2024 is over 60%. We expect the Bank of Canada to start easing rates by mid-2024.

Bonus Tip:

Capitalight Research provides you with insights into the Economy, Commodities and Equity markets!

Interested in subscription information - simply click below and fill in the form and I'll get back to you!

Peter Szydlowski

Director of Sales

We do the research, so you don't have to!


bottom of page