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.
Here’s what you need to know:
- Gold surged above $4,200/oz this week despite Friday’s sharp sell-off, marking its first-ever close at that level.
- Market anxiety deepened over the ongoing U.S. government shutdown and renewed trade tensions with China.
- The U.S. Dollar weakened on tariff fears but rebounded late Friday as the President rolled back 100% tariffs on Chinese goods.
- Investors are now looking ahead to the next FOMC meeting, with expectations building for a possible rate cut.
So, What Kind of a Week Has it Been?
Gold prices look set to turn in another week-over-week gain in spot trading, aiming to close this time in the neighborhood of $4,200/oz and a +5% rise since Monday. This, despite what has played out to be an ugly Friday session that so far has marked the yellow metal’s pricing down more than -2% intraday. Gold’s trading pattern this week outlines a system in which pressure continued to build throughout the week, and now in the final session before the weekend, we’re seeing some pressure being released—for now, in a mostly orderly fashion.
Tariffs and the Dollar Drive Volatility
As is typically the case when providing support and upward momentum to gold prices, this pressure amounts to the increasing stress, fretting, and uncertainty about the stability (or perceived weakening thereof) of the U.S. economy and the global economy as an extension. On top of the shutdown of the U.S. federal government, stretching now to nearly three weeks, markets have been unsettled this week by last Friday’s ad hoc announcement from the U.S. President of an additional 100% tariff on several categories of Chinese goods and the re-acceleration of the trade war between the globe’s two largest economies that has come as a result.
In response, we’ve seen the U.S. Dollar Index weaken significantly over the course of the week, even breaking below 98.5 before the broader reversals we’re seeing on Friday. Outside of direct interest from investors and money managers in building longer gold positions, the softening Dollar certainly added a tailwind to the precious metal’s pricing, contributing to gold’s first-ever close above $4,200/oz.
Reversal Follows Tariff Rollback
Friday’s steep sell-off in gold coincides with the U.S. President walking back the 100% tariffs on China decreed last week, calling them “unsustainable” in reality. The value of this relief (temporary as it may be) to investors is evident in the $100+ sell-off in gold spot markets and the rebounding U.S. Dollar.
However, this only represents an apparent sea-change—one, and only the most recent one—of the three key points of concern held by investors and analysts. The longest-percolating worry, that the U.S. Federal Reserve’s reluctance to lower interest rates by any amount in 2025 until September has overstressed the U.S. economy and left it vulnerable to tipping into a damaging recession, remains at the fore even as a growing consensus expects another -0.25% cut at the next FOMC meeting.
Lingering Risks and Delayed Data
Pushing the economy closer to that potential precipice is the reality of an ongoing government shutdown that, as of Friday, has no likely end in sight. Add to this the obfuscation created by a lack of any major macro data reporting on the health of the U.S. economy, and it’s clear that a lot more things have stayed bad this week than have gotten better.
Just like the release of pressure looks apparent on Friday’s gold price chart, this imbalance of risk-on vs. risk-off inputs is plain to see on the weekly chart. Even shedding $100/oz in a single session, gold is still positioned to post another consecutive weekly gain. The potential pivot points next week are difficult to map, given that we, for now, expect the government shutdown to continue—and this time, add the September CPI report to the list of key macroeconomic data being indefinitely delayed.
So all we can really count on at the moment is that the narratives most deeply troubling to investors and money managers will remain top of mind a while longer.
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.
