Good morning traders, welcome back to another week in the metals markets.
After opening Sunday evening on the uptick following a long weekend, gold prices have sunk a bit and returned to their Thursday afternoon levels now trading at $1275/oz.
This week’s macroeconomic calendar begins with the focus on the assessment of the US housing market for the month of March, before providing our first look at Q1 US economic growth on Friday morning. Internationally there isn’t much on the docket of note, with the exception of a Bank of Japan meeting and outlook-update late Wednesday night that shouldn’t be terrifically impactful for metals markets.
Let’s dive in!
US Economic Data to Watch
Monday, April 22 at 10am EDT // Existing Home Sales (Mar)
[consensus expectations: -3.8% MoM // previous: +11.8%]
The numbers for Existing Home Sales in February was a sharp jolt of positive growth in an economic data set that had been trending downward since last summer. That positivity aside, the large February uptick pretty much guarantees a month-over-month decline this time around. While preceding regional sales data for March aligns with this view, markets are not expected a deep enough drop to roil US Dollar markets or move gold prices one way or the other.
Tuesday, April 23 at 10am EDT // New Home Sales (Mar)
[consensus exp.: -5.0% MoM // prev.: +4.9%]
The expectation of a monthly decline is a little more disappointing in the report on New Home Sales for March, as this particular data point has been mostly on the uptrend since fall of 2018. Still, data reporting that reflects low prior-month home loan applications will have the market already pricing in the drop, and it doesn’t look to be large enough to spook investors. As always though, a much deeper drop than anticipated would be an impulse for Dollar down, gold up trading while the opposite holds true for a strong positive surprise in any US housing data.
Thursday, April 25 at 8:30am EDT // Durable Goods Orders (Mar)
[consensus exp.: +0.7% MoM // prev.: -1.6%]
Durable Goods Orders has been a particularly whippy data set over the last year in terms of the month-to-month numbers. For March, analysts broadly anticipate a US Dollar-bullish rebound from a February pullback. Even so, deeper data divers than I are relaying that thanks in some part to Boeing’s PR nightmares aircraft orders—a major component here—have stayed pinned to lows and that’s likely to keep the overall Durable Goods number from topping 1%. Global growth has shown improvement in the March data though, so a higher-than-expected number is not unimaginable.
Thursday, April 25 at 8:30am EDT // Initial Jobless Claims
[consensus exp.: 200k // prev.: 192k]
It is hard to imagine this weekly number dropping even lower, which may well be the reason to bet on it doing so (don’t do that, but also this is not investing advice.) I suspect anything below 200k will still apply a heavy headwind to gold prices as the US Dollar gets a (possibly irrational) boost.
Friday, April 26 at 8:30am EDT // GDP (Q1)
[consensus exp.: +2.0% QoQ // prev.: +2.2%]
We know that exports from the US were accelerating through the first quarter of the year, which should go some way to offsetting declines in home-based measurements like personal spending/consumption. The biggest influence on an expected drop in domestic growth quarter-to-quarter will be the effects of the government shutdown that started year. By Goldman Sachs’ activity calculation (which I find tends to be the most reliable,) the effects of the shutdown might ultimately peel nearly 0.5% of first-quarter GDP. As analysts begin parsing the report on Friday, know that this is very much a US Dollar vs. gold data set. Strong GDP will be a weight on gold pricing while a print farther below 2% ought to show us some flow out of the dollar and into more riskless assets like gold.
Global Economic Data to Watch
Wednesday, April 24 at 11pm EDT // Bank of Japan Int. Rate Decision
[no policy changes expected]
There are no expectations for an adjustment to the Bank of Japan’s current monetary policy programs, for what feels like the 100th month straight (do we get a prize?) Likewise, the Bank’s general economic assessments are expected to remain the same, with the gloomy exception that Governor Kuroda & Co. are expected to acknowledge that the BoJ’s inflation target of 2% looks likely to remain beyond the reach of the Japanese economy until 2022 at the earliest. I imagine we’d see some weakness in the Yen vs. the US Dollar on this kind of news, but given that it’s nature is fairly low-impact and that it will arrive late night he night for US-based traders, I think it only influence gold prices if they are trading around a sensitive inflection point (e.g., $1275 or $1280/oz) at the time.
And that, traders, is how the week lays out before us. I wish you all the best of luck in your trading this week, and I’ll look forward to seeing you all back here on Friday for a recap of the week’s happenings.