GoldPrice.

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 on the price of gold this week and beyond, as well as other key correlated assets.

Gold prices are taking a step back on Monday morning after money market futures have shifted back to pricing in more than 50 basis points of hiking from the next FOMC meeting, and the central bank of China announced unexpected interest rate cuts that signal the leaders of the world’s second-largest economy are concerned about recently negative data sets. Both of these moves have driven the US Dollar higher, while the negative headlines out of China have also hit the overall commodities basket.

Barring any further escalation out of Asia’s economies, we’re looking set to have another quiet summer week. And, while that means many investors and traders will be leaving their books in “set it and forget it” cruise control, it will be wise to keep an eye out for unexpected volatility in the gold and other commodities, because of the relative lack of market depth this week may amplify any rallies or falls if they do happen.

For now, let’s take a look at the calendar ahead.

US Economic Data to Watch

Wednesday, August 17 at 830am EDT // Retail Sales (July)

[consensus est.: +0.1% MoM // prev.: +1.0%]

It looks like the only (new) numbers we’ll be talking about much this week will come from Wednesday’s data on Retail Sales growth for July. The consensus expects a growth month-over-month, but at a slower pace than the month prior. That the expected numbers (that is, the headline number and the more granular reads the breakout auto sales, fuel prices, etc.) are expected to come in so close to 0% makes it hard to anticipate which way gold (or the Dollar) it likely to shift midweek. For gold, the relationship will probably still be a slightly more volatile version of how the yellow metal typically reacts to this data: Anything above—particularly if it is well above—+0.1% would be taken as another greenlight for the Fed to see its path for aggressive rate hikes through, so gold would come under pressure through the Fed-reaction function and some degree of risk-on swing due to positive data. The Dollar likely climbs again here, as well. Should the Retail Sales number print a negative, there will be more/new questions about whether the Fed should tap the breaks before tipping the economy onto its head; this uncertainty about the FOMC’s next move(s) would be more of a tailwind for gold prices (and possibly a drag on USD.) 

FedSpeak this Week

There’s a decent schedule of public appearance from Fed officials on the calendar this week, even if we’re lacking any of the real heavy hitters. The main question that investors and traders are looking to solve remains whether the Fed—now that the most recent consumer inflation data has joined the labor market numbers in the camp of “surprisingly strong”—will consider if now might be the time to ease the pace of rate hikes (not braking entirely, but maybe throttling back down to +0.50% steps) in order to achieve a “soft landing.” The most useful clues will come from the Wednesday release of the FOMC’s discussion minutes for the July meeting.            

Wednesday: Fed Governor Michelle Bowman (FOMC voter) (930am EDT); FOMC July Meeting Discussion Minutes (2pm)

Thursday: Kansas City Fed President Esther George (FOMC voter) (120pm); Minneapolis Fed President Neel Kashkari (non-voter) (145pm)

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.