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 market prices for silver, the US Dollar, and other key correlated assets.
Gold spot price has dropped quickly in the US pre-market hours, has the first trading session of 2022 is kicking off with the US Dollar rising and Treasury yields rallying aggressively from last week’s lows; Both inputs are negative for gold price, but as the US stock markets have opened for the year the yellow metal appears to maintain support just above $1805/oz.
The week will begin with lower market liquidity again as some major Asian markets remain effectively closed (as a health precaution) and the UK is dark as well (in observance of the New Year holiday.) After that, we should see a fairly normal week and a well-populated data calendar that will culminate with the December Jobs Report on Friday.
For now, let’s take a look at the rest of the calendar ahead.
US Economic Data to Watch
Tuesday, January 4 at 10am EST // ISM Manufacturing Index (Dec)
[consensus est.: 60.2 // prev.: 61.1]
Last week (for lack of much else to discuss,) we touched on the attention that key PMI reads may get over the next month or so from investors and economists looking to project whether or not the winter’s Omicron Variant surge will pose a real obstacle to continued economic recovery. Similar to last Thursday’s regional Chicago survey, ISM’s national index of the manufacturing sector is expected to be a minor step back from the month prior while still (more importantly) remaining robust overall at a value of 60 or better. So, there’s unlikely to be a risk-off response to Manufacturing PMI this month. It may also be worth mentioning that that Chicago PMI exceeded expectation (although the rally in gold prices that came later in the day was counter to what we might have expected from a positive surprise.)
Wednesday, January 5 at 815am EST // ADP Employment Report (Dec)
[consensus est.: +413K // prev.: +534K]
It’s that time once again for our monthly mention of the ADP “private payrolls report” which—most of the time—has little concrete impact on the economic picture and doesn’t offer a truly reliable signal regarding how the same week’s Jobs Report will pan out; but which can still engender a reaction in US Dollar or gold markets (among others) in the event of a big miss or beat against expectations. Keep an eye out for extra volatility in the gold chart if Wednesday morning’s read is out of line with the 413,000 estimate (in theory, an upside surprise might weigh on the yellow metal’s price.)
Wednesday, January 5 at 2pm EST // FOMC Discussion Minutes
We’re not expecting a large or lasting market reaction to the minutes from the December FOMC meeting (from which the Fed announced the decision to speed up the taper in light of accelerating economic growth, projecting an end to the process in March.) However, the parsing of December’s discussions might ultimately lead to the market placing greater (or less) weight on the monthly Jobs Report due on Friday.
Thursday, January 6 at 830am EST // Initial Jobless Claims
[consensus est.: +199K // prev.: +198K]
Certainly, there may be more attention from traders and analysts on the Initial Jobless Claims this week, after last Thursday’s print pulled the four-week average below 200,000 for the first time since the pandemic began in 2020. Still, the higher-frequency data will probably be overshadowed all the same just 24 hours before the December Jobs Report drops.
Thursday, January 6 at 10am EST // ISM Services Index (Dec)
[consensus est.: 66.8 // prev.: 69.1]
The story here should be similar to Tuesday morning’s PMI for the manufacturing sector, at least as in regards: A very shallow reversal from the lofty November print is expected, but the ISM’s index number looks likely remain high and healthy, indicating that the decisions in most industries and states to “live with” the recent Covid surge avoided putting much drag on the economic expansion.
Friday, January 7 at 830am EST // December Jobs Report
[(NFP) consensus est.: +400k // prev.: +210K]
[(unemployment) consensus est.: 4.1% // prev.: 4.2%]
The consensus call for December’s most important labor market data is for the NFP to rebound from a disappointing slowdown by nearly doubling the number of jobs added to the US economy in the month prior. It’s possible that a print as expected, or better, might put pressure on gold prices (and goose the Dollar higher) through expectations that the Fed will have a reaction; But, because the FOMC has already announced that they’ll be speeding up their taper about as much as anyone reasonably expects them to feel comfortable doing, that kind of reaction might be short-lived. Wednesday’s FOMC Discussion Minutes, in theory, might give us a better idea of how closely the Fed will be watching key labor market data in the coming weeks, in their efforts to best time the gap between ending the taper and kicking-off a cycle of hiking interest rates.
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.