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 nearly back to even strength compared to Sunday night’s opening bids after the overnight sessions saw Asian and European investors make take-profit trades on the boost that the yellow metal enjoyed on Friday.
The week ahead looks set to be made up of periods of relative calm and timidity from investors, broken up by big bursts of trading volatility around gold and the Dollar. In the first instance, markets could run lukewarm Monday and Tuesday as investors sit on their hands ahead of Tuesday’s midterm elections in the US; following that (depending on the market reaction to election day,) we might see investors hold their breath again ahead of a vital report on US consumer inflation, due Thursday.
US Economic Data to Watch
Thursday, November 10 at 830 am EST // Consumer Price Index (Oct)
[(core CPI) consensus est.: +6.5% YoY // prev.: +6.6%]
[(headline CPI) consensus est.: +7.9% YoY // prev.: +8.2%]
October’s CPI report is the only core economic data point due this week, but it’s a doozy, being the primary metric for inflation in the US economy. Now that the Fed (via their post-FOMC statement, Powell’s press conference (to an extent) and some early public comments from other key officials on Friday) are indicating that they might be willing to slow down the pace of interest rate hikes as early as December, there will be a more intense level of investor attention looking to see if Thursday’s number makes a “slower” +0.50% hike more likely next month. Any set of numbers, particularly in the “core CPI” data that come in as-expected or lower, should accomplish this (at least in the short-sighted mind of the market) and would be a boon to gold prices through the implication of a cooler rate environment coming earlier in 2023. Given how much attention and anticipation will be pointed towards the Thursday number, markets in gold (and other major commodities) alongside the Dollar are likely to be very volatile, and it will take a least a few minutes post-print to divine which direction it will take investors. Prior to CPI, the trading week could be relatively muted.
FedSpeak this Week
As is often the case immediately following an “important” Fed meeting, there’s a heavy slate of public appearances by key FOMC participants this week. The goal for investors and Fed watchers will be to flesh out the details of how committed key members are to slow the pace of tightening if the data suggests doing so: How much does the data need to improve/deteriorate? Would the committee continue hiking by 50 basis points after the initial “slowdown” or step down to 25 immediately? Any clear statement one way or the other by an official this week could have an immediate impact on gold trading (via the US Dollar.)
Monday: Boston Fed President Susan Collins (FOMC voter) (340 pm EST); Richmond Fed President Thomas Barkin (non-voter)
Wednesday: New York Fed President John Williams (FOMC voter) (3 am); Barkin (11 am)
Thursday: Fed Governor Christopher Waller (FOMC voter) (2 am); Cleveland Fed President Loretta Mester (FOMC voter) (1230pm); Kansas City Fed President Esther George (FOMC voter) (130 pm)
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.