GoldPrice.

Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at these last five trading days with a focus on the market news, economic data, and headlines that had the most impact on gold prices and other key correlated assets— and may continue to in the future.

Gold prices have sunk like a lead balloon this week, with almost no support post-election at $2600/oz after plummeting past even less support at $2700.

So, what kind of week has it been?

A lot of the forces that were clearly supporting gold’s rally over recent months leading up to the US elections have reversed course and are now lambasting the yellow metal, causing this week’s drop beyond two-month lows. At times this week, markets moved acutely in reaction to a key macro data set, but other headwinds gold is facing now are more about the macro environment than a single data-based turn. (Although both maintain a clear feedback loop with one another.)

The key data set in question is Wednesday’s CPI report for October, providing the most recent assessment of consumer inflation in the US economy as the Fed’s first interest rate cut of -0.50% continued to trickle down through the economic machinery. The most pertinent numbers, including “core” CPI on an annual basis increasing at +3.3%, printed not only in line with expectations but at an unchanged pace compared to the prior month. The rest of the data maintains a similar gait. Gold prices, which had already been compressed lower earlier in the week, fell sharply on the news. This fits with the view that the October CPI provides little argument for the FOMC to speed up their pace of cutting interest rates back to “neutral,” if inflation may prove to be stubborn or even resurgent. The Fed’s reaction to inflation data right now very much appears to be a more dominant input for gold pricing than the specter of inflation itself, as the former is what, as of late, has tended to drive gold lower while the latter is historically a driver of higher prices.

Despite the acute impact of this week’s inflation data, that print alone is not the reason that $2700/oz, as a price level, appears a distant memory for gold and $2600 may become unreachable again for a while. Equity markets continue to surge post-election, and so too does the US dollar, the prime foil for gold prices since 2022. Towards the final trading hours of this week, the Greenback has surged to a new two-year high. Prior to the CPI release, this resurgent bull run for USD was the catalyst for the gold spot to fall all the way to $2600 before Wednesday’s report pushed it through. And it’s certainly been a factor in gold being unable to rebound— instead sinking to just above $2550/oz— in the trading that has followed even as there is increasing speculation of a battle brewing between the current Federal Reserve leadership and the incoming Presidential Administration who will (if campaign promises are kept) push for lower rates sooner.

This likely “conflict” (whether it will eventually run hot or cold remains to be seen until at least February) will, of course, have to be a focused point of attention for those of us in the gold market and related assets. For the more immediate future, we have a relatively quiet macro calendar ahead of us next week, although it’s a certainty that post-elections/pre-transfer-of-power headlines will be the dominant driver of most markets for some time.

In the meantime, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I’ll see you back here next week for another market recap.