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 the price of gold this week and beyond, as well as market prices for silver, the US Dollar, and other key correlated assets.

Gold prices are further off of the record highs of last week as trading gets started US markets for Monday. Gold is being weakened, it appears, by another rise in optimism that the newest round of negotiation between Ukraine and its Russian invaders will bear some peaceful fruit. This has led overseas markets to be mildly risk-on, with mixed results in equities; at the same time, it has driven a fall in crude prices, as oil continues to be extremely volatile around news of the war.

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

US Economic Data to Watch

Wednesday, March 16 at 830am EDT // Retail Sales (Feb)

[consensus est.: +0.4% MoM // prev.: +3.8%]

Retail Sales data rarely has a direct impact on the direction or velocity of the gold market; but it can drive momentum in the US Dollar which, in turn (especially for the last year or so,) either puts downward pressure on gold prices (as the Dollar rises) or give the precious metal an opening to rally higher (as the Dollar weakens.) If anything this month, it could be later. Analysts are expecting US retail sales growth to have moderated in February after a large gap higher in the first month of the year. This isn’t terribly unexpected—seasonal and accounting factors goosed the January number to higher highs than anticipated, so a pull-back during a less complicated (in this sense only) February seems reasonable—so there may not be much market reaction to speak of. But there’s always the possibility that the consensus mood of investors is a little bit let down by lower Retail Sales numbers, which may drag on the greenback a bit, lending a tailwind to gold. (Be aware, of course: This relationship also means that another surprising performance in this number would likely have the opposite effect on gold.)

Wednesday, March 16 at 2pm EDT // FOMC Interest Rate Decision

[The FOMC is expected to announce an interest rate hike of +0.25%]

Investors and analysts have been focused on this date since before the start of 2022: The meeting at which the Federal Reserve will raise their overnight interest rate and, by effect, interest rates across the US economy and farther afield. Despite some rising murmurs in recent weeks that still-hot inflation numbers in the US might compel the Fed to take the unconventional step of hiking rates by +0.50% (instead of the standard +0.25%,) Fed Chairman Jerome Powell’s congressional testimony earlier this month all but ruled out the possibility of such a move with their first hike at the March meeting. This doesn’t mean that stubborn inflation pressures can’t bring about such an aggressive move later this year of course, and the Chairman’s post-meeting press conference, as well as the updated staff economic projections that will be released, will be parsed in detail for clues as to how likely the central bank may be to take such action, or to raise rates at consecutive meetings (instead of every-other, which is the fastest “conventional” pace that the Fed has used.) Fed watchers and investors will also be very interested to hear Powell elaborate on how the FOMC views the possible downside risks that the war in Ukraine poses to their plans and projections. In theory, the expected announcement of a +0.25% hike should be an acutely negative signal for gold prices as the yellow metal typically wilts at the suggestion of higher rate environments. However, there’s a greater-than-zero likelihood that—given that the Fed has been telegraphing this hike for most of the year already—the market views this first hike as already baked into the current market prices for gold. Expect greater volatility during Powell’s press conference, as money managers and traders will be swinging positions in the US Dollar or Treasury paper, which directly influence gold prices, and possibly more directly in gold as well.

Thursday, March 17 at 830am EDT // Initial Jobless Claims

[consensus est.: +220K // prev.: +227K]

Weekly jobless claims data has slipped out of our regular rotation of watched data in recent weeks, as the number seems to be stabilizing for now and getting sticky between 200-250K. As a result, we’re still not seeing much market reaction to the number at all on a week-to-week basis, and there’s not much new information that it allows us to plug in to any models for monetary policy (and the pursuant impact on gold prices). And, honestly, it’s unlikely that all of that changes this week. However, we’re putting Initial Jobless Claims back on this week’s calendar is case Wednesday’s FOMC meeting leads to the Fed’s decision-makers putting a particular focus on the strength of the US labor market as a determining factor as to how quickly or how often to raise interest rates through the rest of 2022. Should that be the case, investor attention on weekly unemployment claims will be at recent highs and could lead to volatility in gold and the Dollar.

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.