Good morning, traders; welcome to our market week preview, where we 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.
With a week ahead that is more densely packed with public appearances from FOMC officials than macroeconomic data points, gold is starting the week by consolidating its position above $1900/oz.
Some of the (mild) softening we’re seeing on Monday is attributable to a post-holiday retracement of the market rallies that allowed gold to break resistance at $1900, so are likely due to a moderately stronger US Dollar this morning as a result of more bad news coming out of the Chinese economy overnight.
We’ll keep an eye on developments in China this week, as well as the calendar items below.
US Economic Data to Watch
Wednesday, January 18 at 830am EST // Retail Sales (Dec)
[consensus est.: -1.0% MoM // prev.: -0.6%]
It is possible that his week, we’ll see some interesting trading on the back of Wednesday’s Retail Sales report, wherein investors might react more to the implications for near- to medium-term Fed policy than to what level of economic health might be suggested by the data set. However, gold prices seem set for some degree of tailwind either way. Following on from a softer-than-expected holiday season by several metrics, the broad expectation is for the headline and core Retail Sales numbers to have declined in December. In a vacuum, we would expect this to be a negative signal for risk assets like the stock market since it suggests instability and a downturn for the overall consumer economy. We may see equities go the other way, however, as investors may look through the top-line numbers and see the report putting further pressure on the Fed to slow their hikes faster and consider cutting rates sooner; if that thought takes hold of the session, stocks should certainly rise. Gold may take a win from either side—or both. Implications of a lower rate environment to come so often drive new long positions in the yellow metal; at the same time, the initial shock of a negative sales “growth” number could encourage buying into gold as a safe-haven
FedSpeak this Week
After last week saw a December CPI report that, as expected, drew a picture of consumer inflation in the US continuing to decline, investors across broad asset classes, of course, jumped—two-footed, in some cases—back onboard the sentiment that the Fed much reconsider its still-hawkish projections and planning for 2023 which we’ve discussed so regularly these last couple months. We know that the FOMC is still unmoved, at least in its rhetoric, and will want to temper any market reactions they see as “inappropriate.” That, then, will likely be the core work of the slate of public appearances from FOMC participants, which is pretty crowded this week. Whether their efforts will reel investors (and Fed- and US Dollar-sensitive assets like gold) back this time, we’ll just have to see as the week goes on.
Tuesday: New York Fed President John Williams (FOMC voter) (3 pm EST)
Wednesday: Atlanta Fed President Raphael Bostic (non-voter) (9 am); Philadelphia Fed President Patrick Harker (FOMC voter) (2 pm); Dallas Fed President Lorie Logan (FOMC voter) (5 pm)
Thursday: Boston Fed President Susan Collins (non-voter) (9 am); Federal Reserve Vice Chair Lael Brainard (FOMC voter) (115pm); Williams (635pm)
Friday: Harker (9 am); Federal Reserve Governor Chris Waller (FOMC voter) (1 pm)
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.