GoldPrice.

Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at these last five trading days with a focus on the market news, economic data, and headlines that had the most impact on gold prices and other key correlated assets—and may continue to into the future. 

Despite a sharp rally to begin the US session on Friday, gold prices are positioned to turn in another week of summertime losses this week.

So, what kind of week has it been?  

Last week’s delivery of stronger than anticipated Q2 GDP growth for the US economy (at least in the first estimate) left a noticeable dent in the gold market, and on the back of that, our concern going into this week had been that the potential for a steady stream of consistent-to-improving mid-tier US economic data, culminating in another robust US Jobs Report would end up punching a hole through the shiny metal’s support above $1900/oz. The reality has proved more of a mixed bag for gold prices, as the improving PMI data never quite materialized, but a steep slide in spot prices mid-week blocked gold’s opportunity to finish the week in the green after a mildly disappointing NFP print. 

After a decent rebound and rally on Monday that put the week’s top-tick in just above $1970/oz, gold began sliding again in the overnight session and into Tuesday morning, in a move that seemed less motivated by new data or news reports—we are truly in the dog days of summer, so newsflow, in general, remains light—and more a case of investors and traders selling the somewhat unexpected spike that opened the week. By the time the ISM Manufacturing survey came in roughly on target with expectations, gold spot had slipped back below $1950, and the brief pop higher that the yellow metal saw at the time of release was short-lived.  

Wednesday would prove the be the most active day of the week for traders and speculators, with the momentum ultimately breaking against hopes for more upside for the gold market, or stocks, or really anything that trades counter the US Dollar and the day’s climbing yields on US Treasury paper. The most traded news item of the day across financial markets was the prior day’s report that rating agency Fitch had downgraded their risk rating of US Treasury debt. In practical terms, given the primary ratings agencies’ involvement in the 2008 GFC, the move ultimately carries less weight as a signal of concern in the medium- to long-term. However, this didn’t keep the headlines from having an impact on the market. As US stocks went on to have one of their worst days of the year, gold prices briefly ticked higher in a risk-off play; but the precious metal’s brief rally was muted by a surge in yields, and US Treasury prices fell sharply on the news. Later in the morning, the ADP Payrolls number for July reported a much bigger addition than expected. Here, again, the real pertinence of the headlines is minimal given that a big surprise in the ADP print rarely certifies a similar move in the more important Non-Farm Payrolls number, but also the market again was unable to refrain from an acute reaction. In response to the data set, which, in a vacuum, would seem supportive of continued hawkishness from the FOMC in hiking rates, gold prices rolled off the table again, putting in weekly lows just above $1930/oz. Gold prices, and gold trading activity, generally, would remain muted along this line through all of Thursday’s session. 

Friday’s July Jobs Report, for one of the few times in recent memory, proved mildly disappointing. Specifically in the NFP number. At +187K, the July print did come in slightly below the expectation for 200,000 jobs being added to the US economy last month; but the more notable number is the downward revision of the surprisingly strong June number to a mark below +200K as well. In contrast to Wednesday’s ADP data, this could be seen as a stutter (though not a true stumble) in the ongoing strength of the US labor market and of the broader US economy as a result. Through such a lens, the July Jobs Report seems to be interpreted by the market (at least for this week) as possibly applying pressure on the Fed to again pause interest rate hikes in August, if not for longer. In response, gold prices quickly rose higher on Friday morning before momentum petered out just beyond $1940/oz.  

Next week, the summer swoon continues. This time, with far less in the way of scheduled economic data to drive markets around. With that in mind, and given the focus of most traders and economists on reading how data flow in the interim will inform the actions of the Fed in Jackson Hole later this month, we expect most of next week’s gold trading to be keyed into the release of updated inflation data (via the monthly CPI report) due on Thursday. 

For now, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I’ll see everyone back here for next week’s wrap.