Good morning, traders; welcome to our market week preview, where we take a look at the economic data, market news and headlines likely to have the biggest impact the price of gold this week and beyond, as well as other key correlated assets.
Gold prices are moderately higher this morning, after riding through some choppy overnight trading Sunday that saw the yellow metal under pressure from a temporary rally in Treasury yields.
With gold likely gaining a boost from a headline-driven rally in WTI crude oil back to $100, it appears at least the start of this week will see gold prices influenced by the war in Ukraine’s impact on core commodities.
For now, let’s take a look at the rest of the calendar ahead.
US Economic Data to Watch
Tuesday, April 5 at 10am EDT // ISM Services Index (Mar)
[consensus est.: 58.4 // prev.: 56.5]
The very light data calendar for this week sets us up for five days in which the gold market (alongside other major commodities, and at the US Dollar Index) will be vulnerable to push-and-pull from developments around the war in Ukraine on one hand, and commentary and coverage on the Fed and its hiking path on the other. The former appeared to have a negative impact on last week’s read of manufacturing sector activity, which came in slightly off the expected pace of growth, in the global economy’s first full month of feeling the pinch of supply constraints created unilaterally by the Russian attack on Ukraine. The US economy’s service sector expansion, as described by the ISM data due Tuesday, isn’t expected to be as negatively impacted. But, in the event that there’s little else in the news for markets to trade, if the Services Index read comes in a bit low and receives the same semi-hyperbolic coverage that its cousin saw last week, there may be enough of a risk-off impulse to boost gold prices higher (briefly or otherwise.) PMI reads for the American economy remain very positive relative to history, so we’re less inclined to expect the opposite reaction (weaker gold prices) in the event of an upside surprise.
Wednesday, April 6 at 2pm EDT // FOMC Meeting Minutes
Analysts and Fed watchers will spend Wednesday afternoon parsing the discussion minutes of the FOMC meeting just passed for useful clues regarding the next meeting to come (in May.) A busy slate of public remarks from key FOMC participants including consequential commentary from Fed Chair Powell has made it abundantly clear to investors and money managers that not only is a second-consecutive hike at the May meeting very likely, but the “double hike” of 0.50% is on the table if the central bankers feel that their initial signals have not started to cool inflation enough. One big clue to how likely 50-bips could be in may will be seeing, from the meeting minutes, just how close the Fed may have come to doubling-up in March. Barring any major headlines out of Europe to distract markets’ attention, we can expect some acute volatility in gold prices around the minutes’ release. In terms of longer-lasting changes to the gold chart, if the recent past is any indication, rather than having its trajectory impacted by the increasing or decreasing likelihood of higher rates over the horizon, gold may see another strong tailwind from hedgers if the minutes paint the Fed as more immediately concerned about inflation.
FedSpeak this Week
What Federal Reserve Presidents Williams and Bullard have to say after the markets have the chance to view the March FOMC meeting minutes will likely be more impactful for this week’s trading than what comes earlier in the week. Still, it all will get the market’s close looks as investors try to model how likely it is that the Fed tightens financial conditions even more aggressively in Q2 of 2022.
Tuesday: Fed Governor Lael Brainard (FOMC voter) (10am EDT); New York Fed President John Williams (FOMC voter) (2pm)
Wednesday: Philadelphia Fed President Patrick Harker (non-voter) (930am)
Thursday: St. Louis Fed President James Bullard (FOMC voter) (9am); Atlanta Fed President Raphael Bostic (non-voter) (2pm); NY President Williams (4pm)
And that’s how the week lays out ahead of us, traders. As always, I wish you all the very best of luck in your markets in the coming days, and I’ll look forward to seeing you all back here on Friday for our market-week wrap up.