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 investors setting their tables and stop-orders for the FOMC meeting and Jobs Report due this week on Wednesday and Friday, respectively, gold spot prices are on the backfoot at the start of Monday's trading as the Dollar looks to be regaining some momentum and the 10-year Treasury's yield is back above 4%.
US Economic Data to Watch
Tuesday, November 1 at 10 am EDT // ISM Manufacturing PMI (Oct)
[consensus est.: 50.0 // prev.: 50.9]
If everybody is being honest, it's very likely that data points like the ISM Manufacturing survey get almost entirely overlooked by most investors as it sits in the shadow of Wednesday's FOMC meeting. As such, there's a lower likelihood of real volatility in the Dollar-- and, as a direct result, gold markets-- at the Tuesday morning print. The one possible exception is a number below 50.0, which would indicate a contraction in the sector for the first time since COIVD lockdowns in 2020. However, briefly, we'd expect this to be a risk-off signal, which could benefit gold as a safe haven.
Wednesday, November 2 at 2 pm EDT // FOMC Interest Rate Decision
[The FOMC is expected to raise the Fed Funds target by +0.75%.]
Wednesday's FOMC meeting, the penultimate for 2022, is the first in a rocky run of risk events that all have the potential to reorientate markets and investors' outlooks at the end of the year. Everyone seems to have made peace with the advent of yet another consecutive +0.75% hike from the Fed on Wednesday; to that end, there will be some volatility at the announcement, but it's probably priced into the market already. The main focus instead will be on how the central bank hints at its next move in December. The growing consensus is that the FOMC will reduce the pace of hikes to 50 basis points at the final meeting of the year, a signal that should provide a tailwind to gold. How strong of a tailwind will depend on how strongly Powell & Co. hint that they will slow their roll next month.
Thursday, November 3 at 10 am EDT // ISM Services PMI (Oct)
[consensus est.: 55.1 // prev.: 56.7]
Same as the ISM's report on the manufacturing sector on Tuesday, the industry group's service sector report will play second banana on Thursday, with October's Jobs Report due the next morning. There appears to be less of a chance of big volatility for gold (et al.) here, as the recent trend lines and consensus expectations, this week are farther from the 50.0 breakevens.
Friday, November 4 at 830am EDT // October Jobs Report
[(NFP) consensus est.: +190K // prev.: +263K]
[(unemployment) consensus est.: 3.6% // prev.: 3.5%]
With a key FOMC meeting standing between us, it's more difficult than usual to predict what investors' points of sensitivity around the October Jobs Report are going to be. The consensus NFP projections, as of Monday morning, are for a step-back in the number of new jobs added to the economy this month; a sizeable slowdown, and one that takes the headline number below 200K. This would probably benefit gold prices, at least on the day, in two ways. For one: the signal of general instability/uncertainty around the US economy and the Fed's targeted "soft landing" would be a clear risk-off signal, driving investors to safety. For the other: It would imply a need for the Fed to slow down sooner and perhaps more quickly than anyone is really expecting, reducing the downward pressure put on the yellow metal by expectations of higher rates and by a surging Dollar (which we would expect to slump a bit on a down or worse-than-expected NFP read. All of that said, the consensus has been calling for a major single-month slowdown in NFP for months and for months has been "disappointed."
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.