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.
Gold prices have endured some initial shock from climbing US Treasury yields to continue consolidating recent gains above $1925/oz today, kicking off a week in which the trending path for gold prices—as well as the buy- and sell-prices for most major asset classes—will be dictated by investor sentiment and projections above all else, due to a quiet, devoid of key economic data for most of the week, and the Federal Reserve in a blackout period.
US Economic Data to Watch
Friday, January 27 at 830 am EST // PCE Price Index (Dec)
[(core PCE) consensus est.: +0.3% MoM // prev.: +0.2%]
[(headline PCE) consensus est.: +0.0% MoM // prev.: +0.1%]
As is the usual routine for most months, on Friday, the PCE Index on inflation in the US economy will deliver to us a reheated version of the CPI data we already received for the same period. It will represent that consumer inflation has continued to soften or buckle. Under the pressure of the FOMC's crusade of hiking rates to cool demand, yes, but also as a result of other changes to the supply and demand curve across the global economy. Following the CPI print, gold prices moved higher (alongside other, more risk-oriented assets like stocks) on the old song that the data set should compel the Fed to consider a faster path to easing their intentional constriction of the economy, and the rally would eventually be muted by FOMC participants making a round of public appearances focused primarily on tempering dovish expectations. A key difference this time will be that the FOMC is currently in its scheduled "quiet period" ahead of next week's FOMC meeting, so the mechanism that was used to cool the post-CPI exuberance will be out of commission. Any kind of market reaction to the PCE data this week will be less volatile because it's essentially a re-tread of what we already know. But if gold does get another tailwind from the inflation print, there's less of an obvious corrective force that would curtail the rally.
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.