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 moving with a bit of volatility (but within a very narrow band) this morning; At the time of writing, spot prices are trading at a slight premium to the weekly open and are holding onto the consolidated gains of last week.

With no big-ticket data points or Washington deadlines on the schedule for this week, markets are kicking Monday off with a focus on the complications threatened by the current high levels of global inflation persisting: As they have been in the US in recent weeks, investors in the UK and elsewhere are seeing yields rise during a sovereign bond sell-off. The trend has been putting downward pressure on global equities markets and may lead to a down day for US stocks as well.

In gold markets, we’re seeing already that the tight tie between the movement of the benchmark 10-year Treasury’s yield and gold with continue to dictate the trajectory and space that the yellow metal has this week: the gentle rally that gold is enjoying just after markets opened in New York has coincided with the 10-year slipping back below a rate of 1.6%. To start the week, expect fluctuations around this number to impact gold prices.

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

US Economic Data to Watch

Thursday, October 21 at 830am EDT // Initial Jobless Claims

[consensus est.: +300K // prev.: +293K]

Weekly jobless claims unexpectedly dropped below 300,000 last week for the first time since the Covid-19 crisis last year; an optimistic data point on the US labor recovery when the month NFP numbers have been worrying. Without many other data points of note this week, and as investors and managers grapple with positioning ahead of the November FOMC (in a little over two weeks,) there’s likely to be a little more attention on Thursday’s jobless claims. The consensus expectation is accounting for a (reasonable) rebound back to 300K after last week’s surprise, so there’s some cushion against disappointment if the number doesn’t drop further. While it’s impractical to think the Fed is basing major policy timing on Initial Jobless Claims at this point, a positive surprise here (like another drop towards 250K) probably acts as further confirmation of the November taper and weighs on gold prices while boosting the US Dollar.

Thursday, October 21 at 830am EDT // Philadelphia Fed Mfg. Index (Oct)

[consensus est.: 25.0 // prev.: 30.7]

It’s been a while since the Philly Fed Index made an appearance here, just because it’s month-to-month relevance for price action in the gold or USD markets has been minimal in that time. But with the data calendar so thin this week, we’re keeping an eye out for other releases that might catch investors’ attention with less noise elsewhere. Economists and analysts are watching the recent slowdown in measurements of US manufacturing activity in recent weeks—not for possible warnings that the economic recovery might be faltering, but to note if a slower pace of manufacturing growth might join the general supply-chain gridlock and higher commodities prices in keeping global inflation higher. From that perspective, a deeper than expected drop in the Philly number this week could be a tailwind for gold prices. 

FedSpeak this Week

Fed observers and market analysts this week will continue to parse Fed officials’ public comments for any changes to, or reinforcements of, the FOMC’s projected plan to begin tapering asset purchases in November at a pace of $15 billion per month. September’s FOMC meeting minutes, released last week, have left investors relatively certain that the first round of the taper will move forward despite the most recent Jobs Report detailing a disappointing slowdown in the labor market recovery for the second month in a row. Although unlikely, any language from key Fed officials that casts doubt on November’s taper would be expected to lift gold prices.

Tuesday: San Francisco Fed President Mary Daly (FOMC voter) (11am EDT); Fed Governor Michelle Bowman (FOMC voter) (11am); Atlanta Fed President Raphael Bostic (FOMC voter) (250pm); Fed Governor Christopher Waller (FOMC voter) (3pm)

Wednesday: Fed Governor Randal Quarles (FOMC voter) (1pm)

Thursday: Fed Governor Waller (9am)

Friday: San Francisco President Daly (10am)

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.