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.
After some mild volatility during the overnight sessions, gold prices are holding the line consolidated last week, with spot prices steady around $1780/oz.
With slow summer in full effect, gold markets will be looking for a catalyst before any strong move can be made higher or lower from this new basecamp.
The key data point on this week’s calendar is the June Jobs Report due Friday morning: Economists are expecting the labor market recovery to continue at pace, aided by the boost in seasonal hiring that is typical for this point in the summer. Otherwise, it looks like we can expect another calm week for the yellow metal and its correlated markets.
For now, let’s take a look at the rest of the calendar ahead.
US Economic Data to Watch
Wednesday, June 30 at 815am EDT // ADP Employment Report (June)
[consensus est.: +550K // prev.: +978K]
With the US labor market in the midst of such a unique attempted recovery, ADP’s monthly read on private payrolls growth has been particularly unhelpful in 2021 when it comes to handicapping the results of the BLS’ Jobs Report that follows on Friday. For those trading Dollar-correlated risk assets like gold, however, it remains a calendar point to be aware of each month as the market is always likely to react (at least initially) to any surprises.
Thursday, July 1 at 830aam EDT // Initial Jobless Claims
[consensus est.: +389K // prev.: +411K]
Initial Claims will, as usual, be overshadowed by the release of the monthly Jobs Report. In terms of modeling for the next Jobs Report though, it’s worth pointing out that for the last two weeks we’ve seen claim numbers back above 400,000 when analysts were expecting declines. If we see it happen for a third time there might be more vocal concerns about a stall in the labor market recovery.
Thursday, July 1 at 10am EDT // ISM Manufacturing PMI (June)
[consensus est.: 61.0 // prev.: 61.2]
US industrial activity appears to have settled in to an elevated pace of expansion at this point in the recovery, which is an unqualified positive sign for the overall economic recovery. It’s possible we might see some volatility in the Dollar and in gold prices if June’s manufacturing activity drops meaningfully below expectations (Dollar up, gold falling, most likely,) but the PMI would probably need to fall as far 55.0 to draw that kind of attention.
Friday, July 2 at 830am EDT // June Jobs Report
[(NFP) consensus est.: +700K // prev.: +559K]
[(unemployment) consensus est.: 5.7% // prev.: 5.8%]
In last Friday’s preview of the summer ahead, I pointed out that surprises in inflation or labor market data represent on possible point of volatility for gold and precious metals prices in what looks like an otherwise slow stage. In terms of the labor market, that kind of surprise would have to be a sharp decline in the pace of jobs recovery which would push the more hawkish members of the Fed back on their heels and reassert expectations that the next rate hike won’t come until 2024 at the earliest. As it stands today, analysts and observers are expecting the NFP to have moved in the more positive direction in June, adding considerably more jobs than the month prior thanks to the usual surge of seasonal hiring adding a boost to what has been a steady (if far from finished) improvement to the US labor market.
FedSpeak this Week
Last week’s glut of public appearances by Fed officials didn’t offer much in the way of new color or perspectives on the Fed’s plans for taper talk in the coming months or potential inflation pressures accelerating the FOMC’s rate path: Most every relevant Fed official used their comments to acknowledge that persistently high inflation would mean earlier tightening, or to reiterate that the committee generally expects currently high inflation to be temporary—just two sides of the same, very slim coin. Still, as we pointed out on Friday, possible (if unexpected) shifts by the Fed would be on possible source of volatility that might spur gold prices back into action during an otherwise dull summer; So FedSpeak will remain worth keeping an eye on.
Monday: Richmond Fed President Thomas Barkin (FOMC voter) (12pm EDT); Fed Vice Chair Randal Quarles (FOMC voter) (110pm)
Wednesday: Atlanta Fed President Raphael Bostic (FOMC voter) (8am EDT)
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.