Happy Friday, traders; welcome to our regular Friday recap of the week’s macroeconomic data and headlines that mattered most to the precious metals and Dollar markets. And the final full trading week of 2019, at that!
As we close out the Friday session, gold prices are trading a few dollars higher to $1478/oz in spot markets for the week and silver has also made gains to trade once again above $17/oz.
The precious metals have risen this week even as equities performed well through the week, as did the US Dollar Index; the benchmark yield on the US 10yr is even trading higher than 1.9%.
As we expected when putting together Monday’s preview, it’s been a pretty dull week in the markets as the large majority of investors have wound things down ahead of the holidays and the one economic narrative that could have goosed trading action—the US and China’s efforts to formalize an initial trade agreement—had very little in the way of development. Rather than squeeze a full-sized recap out of a dull week, this time around I’ll give you a brief rundown of the days’ interesting items before sending you off to get your last-minute holiday shopping finished.
So, what kind of week has it been?
Monday: The Feel-Good Market Mood Continued into a New Week
Monday set the tone of the lackluster trading week that we’ve ended up with. It was clear that the optimistic mood of the prior week was carrying over, propelled mostly by the announcement of the US and China’s “phase one” trade deal, but also the UK Conservative Party’s newly won majority that appears set to finally settle all of this “Brexit uncertainty.” Both of these developments have led to a sense of certainty in the market; as a result, risk-appetite was up on Monday along with most equity markets and gold prices softened a bit during the US session.
The one piece of trade news worth remarking on from the day: White House economic advisor Larry Kudlow’s comments to the effect that any theoretical “phase two” trade deal with China would be dependent on the perceived success of “phase one.” For my money, this doesn’t bode very well for long-term trade peace, but that’s a conversation for after the holidays.
Tuesday: UK Conservatives Took the Brexit Reins, US Manufacturing Sector Outperformed
Monday’s trade-based optimism would shake a little bit on Tuesday, with investors in Europe and London finding new reasons to be concerned about old risks as report emerged that (still) Prime Minister Boris Johnson will seek to legally limit the post-Brexit transitional period to one year. A great many experts who have been following the negotiations appear worried that one year is not enough time to create a comprehensive trade relationship and legal framework. In this case, by the second half of 2020 we’ll be back to fretting about Britain’s risk of “crashing out” again, this time on January 31, 2021.
Those concerns brought about a mild rise in risk-off sentiment that boosted gold prices, but the yellow metal’s rise was limited by another strong day for stocks (and a rebounding Dollar) in the US on Tuesday, lifted by better than expected data reporting on November’s manufacturing and industrial production.
Wednesday: US House of Representatives Voted to Impeach Donald Trump
Here is (what I hope is) the weirdest sentence I’m going to write before 2020: Wednesday was a very dull news day, with the exception of the successful vote to impeachment a sitting US President. Trade, geopolitical, and data headlines were all calm and quiet while equity markets sat on their hands ahead of the impeachment vote. The lack of motivation saw gold prices fall to their lowest for the week—south of $1475—ahead of the US market open, although the yellow metal pretty swiftly rebounded above that psychological support level. With the House’s impeachment vote finally coming just ahead of the start to Asia’s Wednesday session, gold and other non-Dollar safe havens got a boost on the headlines but move was ultimately muted.
Thursday: Markets Took Impeachment in Stride, Dour Macro Data Lifted Gold to $1480
Even major US stock markets’ general reaction to the impeachment vote was one collective shrug, with equities trading new highs on Thursday; although not with any impressive momentum. With an affirmative vote on impeachment by the House of Representatives having been a mostly forgone conclusion for weeks now, the main driver for gold trading on Thursday was the only roughly spot of US economic data for the week. The Philly Fed’s Manufacturing Index dropped to a six-month low just a breath above 0.0 and, somewhat less worryingly, initial jobless claims printed above 225k for a consecutive week. The risk-off impulse supplied by the data, however light, send gold prices trading as high as $1480/oz.
Friday: A Quiet End to a Quiet Week
As we move into the weekend and the start of the holidays season in the US, gold prices have sold off slightly from Thursday’s topper. On the news front, the impeachment process threatens to drag on at least a little while longer (and with a good bit more nonsense politicking) than anticipated; and this morning’s consumer spending and PCE inflation data arrived effectively in-step with expectations, giving our risk markers very little to react to. Since then, both news flow and market trading have been just about as inert as most of the week behind us.
Of course, there’s little reason to expect things to pick up next week (or the following week, really) as the majority of the world’s financial markets slide into the holidays and year end. We’ll have Durable Goods squeezing in under the wire on Monday, but trading depth will be mild and it’s hard to imagine any kind of trade developments with US officials taking the week off while most of Europe and the UK’s governments and traders will be dark until January.
Good luck getting the last of your holiday shopping done this weekend traders. For those who are staying plugged-in, I’ll see you next week; for the rest, I hope you have a very happy holidays and I look forward to talking and trading with you in 2020!