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 on the price of gold this week and beyond, as well as other key correlated assets.
Gold begins the week having taken a small step backward from Friday’s close, but still looks to be consolidating a base of strength just below $1800/oz as we move into a relatively quiet trading week.
US Economic Data to Watch
Thursday, December 22 at 830am EST // Initial Jobless Claims
[consensus est.: +225K // prev.: +211K]
At the tail end of last week, we saw that the FOMC’s insistence that the path of hiking and tightening focused on cooling inflation won’t be softening any time soon has left investors very sensitive to potential negative macroeconomic developments—or data-based indicators—despite the run of very encouraging inflation data that has printed since the autumn. See the release of Retail Sales data for November last week, which pretty clearly contributed to the instability in equity markets (and some measure of a tailwind for gold prices.) In a very sparsely populated pre-Christmas trading week, I’ll keep an eye on the weekly jobless claims data to see if there’s an added volatility caused by a beat or a miss. If there is, it’s most likely to be expressed in the USD market, from which gold prices will have a mostly inverse reaction to the Greenback’s directional moves.
Friday, December 23 at 830 am EST // PCE Price Index (Nov)
[(core PCE) consensus est.: +0.2% MoM // prev.: +0.2%]
[(headline PCE) consensus est.: +0.1% MoM // prev.: +0.3%]
As usual, the market and other observers will feel pretty certain that we have well-set expectations for how the “Fed-preferred” read on overall inflation in the US economy will print on Friday; we’ve seen the pivotal CPI data for the same period, which came in cooler than expected at a crucial time, as well as the wholesaler-focused PPI data and other PCE inputs. So, the potential for a true “surprise” is low, but in the past, that hasn’t always stopped markets from reacting, at least in a temporary, knee-jerk fashion, to the PCE release. The thing to keep an eye on this time is just how shallow market depth is likely to be, given that Friday is the last trading session before Christmas and most traders and managers will be signed out. This always creates the potential for an outsized move. So, while it’s not usually worthwhile, from a gold trading perspective at least, to “play” the PCE report’s release, in this case in particular it may be prudent to position for safety in the event of more volatility than usual just before the holiday.
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.
Gold Price Chart
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