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 other key correlated assets.
Gold prices are considerably higher to begin this new week, having immediately jumped after yesterday evening’s global market open. Gold appears to be driven towards $2000/oz again by virtue of its status as a traditional safe-haven, as conditions in Ukraine both on the ground and in negotiations deteriorate and global equity markets get off to a rocky start. It’s likely gold is also being boosted as part of an overall rally for the commodities basket alongside crude oil, as prices for WTI move well above $100/barrel.
Headlines will probably continue to be a driver through the week, as the economic calendar is relatively light following the Easter weekend, which extends through today for many European markets and may result in spots of lower liquidity this morning.
For now, let’s take a look at the rest of the calendar ahead.
US Economic Data to Watch
Thursday, April 21 at 830 am EDT // Philadelphia Fed Mfg. Index (April)
[consensus est.: 20.0 // prev.: 27.4]
Investors were let down earlier this month when the ISM Manufacturing Index, which gauges the health and pace of expansion in the US' industrial sector, slipped to its lowest levels in well over a year. Even if the overall picture for the manufacturing economy has remained positive overall, it demonstrated the risk that both mounting input costs and the reverberations of a war in Europe could pose to the US economy’s engine room. This week’s Philly Fed manufacturing index only covers a single Fed region, but a key region and one considered a bellwether for the larger whole. As the first meaningful data on the industrial sector for April 2022, economists expect a slowdown that carried over from March but hope to not see signs that things may deteriorate much further before improving. The reaction function for gold can be expected to be pretty traditional here: A lower, more worrying number than expected likely puts a risk-off tailwind behind the yellow metal.
FedSpeak this Week
The (seemingly) long April wait for the Federal Reserve’s next FOMC meeting is nearing an end and with the committee gathering in the first week of May, this week will be our last before the blackout period which restricts Fed officials from making public comment. Although it would still be a reach to seriously describe last week’s consumer inflation data as “good,” the green shoots of suggestion that the Fed’s first +0.25% rate hike in March actually helped decades-high inflation put in a top last month will probably come up in the Q&As with (and maybe even the prepared remarks from) key FOMC participants. And there be some added attention paid to the Thursday afternoon appearance by Chairman Powell, at an IMF event where he will be joined by ECB President Christine Lagarde, among others, to discuss paths and obstacles for the global economy.
Monday: St. Louis Fed President James Bullard (FOMC voter) (4pm EDT)
Tuesday: Chicago Fed President Charles Evans (non-voter) (1205pm)
Wednesday: San Francisco Fed President Mary Daly (non-voter) (1030am); Chicago President Evans (1130am)
Thursday: Federal Reserve Chairman Jerome Powell (FOMC voter) (1pm)
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.