GoldPrice.

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 are taking a long leg higher to start the trading week, partly in response to a moderate downside miss on some key manufacturing-sector reporting this morning.

The question for most of this week will be whether or not the gloom and worry of last week continue to dominate the direction and responses of investors in the gold markets and elsewhere. The trajectory of things may then change, just at the end of the week, with the arrival of a pivotal Jobs Report.

US Economic Data to Watch

Monday, October 3 at 10 am EDT // ISM Manufacturing Index (Sep)

[consensus est.: 52.1 // prev.: 52.8]

Manufacturing activity in the US, as measured by the ISM, has flattened out in recent months, but at least that’s an improvement over the steep path of decline that marked the first half of 2022. This week’s expectations for another mostly-unchanged read leave some room for a small decline to not necessarily catch investors off-guard. Poor performance here might bring a tailwind for gold, as it’s more likely to suggest that the Fed needs to slow down (a signal that would weaken the Dollar) and send investors looking for safe havens.

Wednesday, October 5 at 815 am EDT // ADP Employment Report (Sep)

[consensus est.: +200K // prev.: +132K]

Last month’s weaker ADP (ahead of another over-performing non-farm payrolls report) exemplifies the disconnect between the midweek “private payrolls” number and the headline Jobs Report that follows for the same month. Nonetheless, markets will trade the ADP number this week (and every week) if it comes in off-target. As has become the norm: a stronger number keeps the Fed pushing rates higher and weighs on gold prices in the near term; a miss to the downside may spur the yellow metal higher this week (at least before Friday.)

Wednesday, October 5 at 10 am EDT // ISM Services Index (Sep)

[consensus est.: 56.0 // prev.: 56.9]

On Wednesday morning, the state of trading around the ISM’s service sector surveying will be much the same as we see with Monday’s manufacturing-focused variant. What could come into play with both, given the gloomy mood and levels of concern over economic growth that subsumed the markets last week, is that we could see strong snap-backs in risk appetite if first- or second-tier economic data comes in better than expected, as the level of relief will be higher compared to the current pessimistic tone of investors as a whole. Right now, though, it’s a big “if.”

Friday, October 7 at 830 am EDT // September Jobs Report

[(NFP) consensus est.: +250K // prev.: +315K]

[(unemployment) consensus est.: 3.7% // prev.: 3.7%]

The monthly jobs report continues to be vital for projecting interest rate policy or simply the immediate health of the US economy. Both have a very strong, material impact on the pricing action for gold and the US dollar, sometimes as part of a feedback loop between the two. We can say that another upside surprise will again put strong pressure on gold prices, both in reaction to the expected surge in USD (itself a reaction to expectations that the Fed will continue in its aggressive path of rate hikes) and through the more traditional function wherein positive economic data weakens safe havens like gold. We can also estimate the opposite response in the case of a big miss this month. However, it’s more difficult to be sure in that case, as there’s always some potential that investors rushing into safe harbors after bad economic data could still result in a stronger Dollar if the Greenback is preferred to gold.

FedSpeak this Week

Last week, the constant stream of high-level FOMC officials using their public appearances to re-iterate the position that a.) the Fed will continue aggressively tightening financial conditions in order to dull inflation, and b.) this tact progressively increases the risk of recession in the US economy. This through-line of the week was a big contributor to the gloomy, risk-off tone for most of last week, and we will look out for a replay of the same over the next few days before Friday’s Jobs Report.

Monday: New York Fed President John Williams (FOMC voter) (310pm EDT)

Tuesday:  Cleveland Fed President Loretta Mester (FOMC voter) (915am); Fed Governor Philip Jefferson (FOMC voter) (1145am); San Francisco Fed President Mary Daly (non-voter) (1 pm)

Wednesday: Atlanta Fed President Raphael Bostic (non-voter) (4 pm)

Thursday: Chicago Fed President Charles Evans (non-voter) (1pm); Fed Governor Lisa Cook (FOMC voter) (1pm); Fed Governor Christopher Waller (FOMC voter) (5pm); Mester (630pm)

Friday: Williams (10 am)

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.