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 prices are starting out the week on a bit of a heater, having gained roughly $10/oz overnight and another $10 in the earliest hours of US pre-market trading.
Gold’s rally looks part of a relief rally, for the time being, as the US Dollar eases and the 10-year Treasury’s yield has slipped back below 4%. Which is the “right” stance for markets to be taking ahead of the next FOMC meeting in early November—Thursday’s relief or Friday’s return to mild panic—looks to be the question of the week ahead.
US Economic Data to Watch
Thursday, October 20 at 830am EDT // Philadelphia Fed Mfg. Index (Oct)
[consensus est.: -5.0 // prev.: -9.9]
Given the slow constriction of the US economy since the summer, there’s been an expectation that growth and activity in the US manufacturing sector would soften, and it has; but the most reason ISM manufacturing index survey numbers came in surprisingly close to the breakeven between growth and contraction. As a result, there will be a lot of attention paid to the key regional surveys, like Thursday’s Philly Fed Index, for signals of how October’s number for the greater US economy might look. Poor showings on this economic data will translate to a decent tailwind for gold prices; this dynamic will continue to be amplified as worsening reads on the industrial heart of the US economy could force the Fed to cool its super-hot tightening cycle.
Fedspeak this Week
With the cupboard nearly bare in terms of scheduled economic data this week, commentary from a deep roster of FOMC officials this week is more likely to provide the drivers of market sentiment. The still unanswered question: Will the Fed feel empowered and/or compelled to hike rates by another +0.75% at their next meeting? (Even signaling as much will put downward pressure on gold prices) Or are the more dovish members consolidating support for a less aggressive move? (The action or implication of which should create a friendlier environment for the yellow metal.)
Tuesday: Minneapolis Fed President Neel Kashkari (non-voter) (530pm EDT)
Wednesday: Chicago Fed President Charles Evans (non-voter) (630pm); St Louis Fed President James Bullard (FOMC voter) (630pm)
Friday: New York Fed President John Williams (FOMC voter) (9am)
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.