Good morning, traders; welcome to our market week preview, where we 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 trading at eight-month highs this morning as the sharp rally that closed out last week continues.
The economic data calendar this week is oddly balanced, as there is just one data set due that is worth focused attention, but it is a vital one—the newest inflation data will hit the wires on Thursday morning. On either side of the CPI print, we expect to see FOMC officials continue to try and cool the markets’ excitement to price in a 2023 rate cut that the central bank remains adamant is unlikely to happen.
US Economic Data to Watch
Thursday, January 12 at 830am EST // Consumer Price Index (Dec)
[(core CPI) consensus est.: +5.7% YoY // prev.: +6.0%]
[(headline CPI) consensus est.: +6.5% YoY // prev.: +7.1%]
The consensus expectation for December’s consumer inflation numbers is holding out for another downshift in the severity of price increases across the US economy. Even if the CPI data represents inflation being “less hot” more so than officially cooling down just yet, economists expect we’ll see signs that point to the deeper-rooted accelerants of inflation these past 15 months also turning downward—rent inflation, a month the most prominent. Based on the over-excitement with which investors seized on last Friday’s Jobs Report data as any indication at all that the Fed may be compelled to change course and cut rates before the end of this year, we’ll look for an as-expected (or cooler) print on CPI this week to give gold prices another push higher (likely alongside equities) at the Dollar’s loss.
FedSpeak this Week
This week’s docket sees the full-force return of key FOMC officials to the public speaking circuit for 2023, including Chair Jerome Powell. Even with only a few participants standing/sitting in front of a microphone last week, we already got a taste of what the next few days of central bank rhetoric will sound like and what kind of impact it may have. Officials were quick to pipe up following a more optimistic than realistic reaction to Wednesday’s FOMC discussion minutes. The market exuberance that turned a profit for many investors on Wednesday and certainly lifted the gold market was talked quickly back down. We can probably expect another go-round early this week, as officials will want to counter the rallies following Friday’s “lower” NFP number which convinced investors to re-price again for 2023 rate cuts and saw gold spot prices rocket to seven-month highs, setting the base for this week’s gold rush.
Monday: San Francisco Fed President Mary Daly (non-voter) (12:30 pm EST)
Tuesday: Fed Chairman Jerome Powell (FOMC voter) (9am)
Thursday: St. Louis Fed President James Bullard (FOMC voter) (1130am)
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.