Happy Friday, traders.
What kind of week has it been?
Despite some action in the developing macroeconomic stories connected to precious metals and other related markets—the continuing drama of the US government shutdown and Trump’s wall, developing views of the Fed’s policy path moving into 2019, a new deadline set in Brexit negotiations within the UK government-- gold has done some pretty range-bound trading this week. Shiny yellow has been trading within narrow bands of $1280-1296/oz on the spot markets since Monday, with the greater concentration of spot prices sitting between $1286-1293. Silver’s movement has been somewhat more volatile over the same period, but itself has only swung around in a roughly $0.25/oz range and currently trades $15.62 in spot markets, roughly in the middle of its weekly range. At time of writing, gold spot price is $1288.50/oz.
The week started on a shaky foot in terms of US economic data, as the latest evaluation of PMI in the service sector showed that it, like last week’s PMI for manufacturing, is starting to slide down towards the less-optimistic baseline that’s been set by other, similar trackers.
From there the week was fairly calm in terms of specific data releases. Initial Jobless Claims were lower than expected, although still maintain the slightly elevated average that began in Q4 of last year. The CPI measure of inflation in the American economy, the “core” as well as the headline number, delivered exactly as expected this morning.
From overseas, we saw economic data that furthered market concerns about developments in the first quarter of this new year; Chinese inflation was weaker than expected, adding to fears of serious trouble in the world’s second largest economy, and UK growth seems to be straining under the weight of the unknown when it comes to Brexit and the nation’s trading and economic future.
The biggest motivator for gold pricing this week wasn’t the numbers, but the language. On Wednesday a combination of the published minutes for December’s FOMC meeting as comments from individual committee members re-confirmed that “dovish hike” and cautious path forward that was laid out alongside December’s short-term interest rate hike. The overall market reaction to this reaffirmation, lead by drops in the US Dollar and Treasury yields, brought gold off the bottom of it’s lows for the week ($1280) to north of $1290/oz and towards the gold highs of the week above $1295.
Up Next Week
We’ll of course be keeping up with our favorite macro stories:
- Will any progress be made in re-opening the US government?
- Will there be anything tangible to show for this week’s US-China trade talks?
- Is Theresa May’s parliament vote on Brexit as doomed as it seems? If it does fail on Tuesday, what’s next?
On the data front, the US will have a light week with a read of consumer sentiment on Friday the only release that highlighted on the domestic calendar. We’ll have little more to warrant our attention internationally though, as we get some important inputs regarding the state of bother the German and Japanese economies during the week and, of course, the “meaningful vote” on the UK government’s Brexit plan on Tuesday afternoon.
Until then, you have a weekend to enjoy! Get that taken care of, and then I’ll see you all back here on Monday for a preview of the week’s economic calendar.