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 seem to be getting out on the good foot to begin this week’s trading, as the yellow metal trends higher in US pre-market trading.
Overseas equity markets have been generally positive in their first session of the week, following Friday’s close that saw the S&P 500 at (yet) another all-time high; There’s bound to be some tentative, if not unusual, fluctuations and ticks in the market to begin the week however, with an important FOMC meeting starring in the data and news calendar.
For now, let’s take a look at the rest of the calendar ahead.
US Economic Data to Watch
Wednesday, December 15 at 830am EST // Retail Sales (Nov)
[consensus est.: +0.8% MoM // prev.: +1.7%]
Retail Sales growth in the US has been strong over the course of 2021, with the post-vaccine surge in spring being followed by steady increases in most months. That very steady lead, combined with more directly negative pressures like inflation fears and general worries about a new Covid variant at the end of November, has analysts and economists anticipating a more moderate month-over-month pace for Retail Sales growth in the data set due this Wednesday. The +0.8% uptick that’s expected would still be a positive contribution, but traders in safe haven assets like gold will want to keep an eye out for not only the data but the headlines covering it: If headlines take a more fatalistic approach to seeing November’s sales grow more slowly than usual, gold prices could benefit an increase in inflation worries among investors.
Wednesday, December 15 at 2pm EST // FOMC Interest Rate Decision
As of this morning, the consensus expectation seems well set for the FOMC to announce an accelerated pace of tapering after Chairman Jerome Powell acknowledged that the central bank might well be encouraged by recent labor market and inflation data (even before last week’s CPI) to get more aggressive in tightening policy. Because a faster pace of taper implies a shorter distance between December 2021 and the Fed’s first interest rate hike, this expected announcement on Wednesday is naturally bearish for gold as it dents the yellow metal’s outlook in the medium-term. The Fed’s updated Summary of Economic Projections will also probably create some amount of drag on gold prices. It seems reasonable to expect that the “consensus dot” will reflect that accelerated taper/hike function by projecting two hikes in 2022; a more aggressive—but still possible—projection would call for as many as three hikes next year, which would suggest the first hike coming as soon as early summer. It’s possible that the markets may feel that a faster taper and two 2022 hikes are already accounted for in asset prices by Wednesday morning, in which case the downside pressure on gold prices would be subdued. Ultimately, gold’s path post-FOMC this week will be determined by how aggressively the Dollar moves (presumably higher.) Even if it’s never impossible, it is difficult to imagine a bullish Wednesday afternoon for gold prices unless the Fed breaks away from expectation.
Thursday, December 16 at 830am EST // Initial Jobless Claims
[consensus est.: +195K // prev.: +184K]
There’s bound to be some level of fatigue in the markets come Thursday morning, after investors and managers spend energy re-positioning following Wednesday’s FOMC. Tracking the progress of the labor market’s recovery through the weekly claims data will still be relevant in the weeks ahead, however.
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.