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.

While there have been no outsized shifts or runs of dramatic volatility, gold has had an up-and-down week. One that has turned things around late in the game to bring the yellow metal into a positive position and its first weekly gain in spot prices in a month.

So, What Kind of a Week Has it Been?

We think two things were made clear this week. Or maybe just reiterated, depending on one's point of view. One important reality on display this week—that the FOMC remains more hawkish than not and is getting more authoritative about dampening expectations for the timing and scale of interest rate cuts in 2024—has been pretty visible if one were only reviewing the week's headlines. But we also believe it would only take a cursory glance at the last five days' trading charts for gold, the US Dollar, and other correlated assets to see plainly the market (as a mob) is desperate for any input from macroeconomic data or the headlines that could force the FOMC to reevaluate and begin loosening monetary policy sooner.

Gold had a sturdy start to the week. Ahead of Wednesday morning's CPI release, the yellow metal put some distance between its current bid/ask spread and the recent line of resistance at $2300/oz—first in a steady climb on Monday and then in a sharper rise on Tuesday as investors (presumably) began positioning for the mid-week double-whammy of CPI data and the end of June's FOMC meeting. By the earliest hours of Wednesday in New York, gold had retaken a position near $2320.

The Consumer Price Index, the US' most discussed metric for price inflation, came in effectively in line with expectations just before the market opened on Wednesday, with most key month-over-month and annualized numbers coming in roughly -0.1% lower than projected. The monthly change in overall inflation grabbed some headlines as it was reported to be flat (+0.0%.) The read is another—the second consecutive, at least—sign that consumer inflation has begun to move lower again after being stubborn through the spring. This was reflected in the gold market by an acute jump up to $2335 immediately post-CPI. It was up in the air, however, how likely it might be that this marginal cooling of prices could nudge the Fed towards earlier action; the lack of conviction weakened most initial CPI trades by mid-day, and gold prices slunk back to $2320.

There were no signs of a lack of conviction from the FOMC. The committee's consensus statement and Jerome Powell's post-meeting Q&A combined to underline in bold the messaging that Powell and other key figures at the Fed have been espousing for weeks: The progress on inflation is promising, but the job isn't done. In other words, there are no interest rate cuts now and not soon. The heaviest emphasis on this latter point came from the Fed's quarterly update to the Staff Economic Projections, which now indicates that the consensus expectation at the Fed now holds just a single rate cut before the end of 2024 (albeit an increase to four cuts expected to come in 2025.) As the US Dollar roared with the backing of the Fed, gold prices fell precipitously through Wednesday afternoon and the overnight sessions, coming within touching distance of the $2300 lows before buyers stepped back in shortly after Thursday's New York open.

Just before gold found a landing to rebound from on Thursday morning, something interesting happened. Or, rather, something that would capture investors' interest happened. The Produce Price Index (not the price of goods in the US, but effectively the price of the materials to make those goods) showed an unexpected decrease of -0.2% in May. Over the course of the trading day, reporting and commentary from various financial analysts and talking heads made it clear that investors' sentiment was being drawn towards this PPI number as a stronger argument that maybe inflation is starting to drop faster than the FOMC acknowledged. If input prices were this much lower in May, could we expect to see a commensurate drop in next month's CPI? It was a slow build, but with the opening of Asian trading on Thursday evening into the overnight hours, investors in several asset classes seemed to be re-pricing—in spite of the Fed—the potential for earlier and/or multiple rate cuts this year. This was certainly evident in the gold market, where spot prices rose steadily higher to the level just below $2335/oz, where it has maintained and potentially consolidated through Friday, with the yellow metal looking likely to turn in its first week-over-week gain in a month.

The pickup could bode well for gold with a more reserved week ahead in terms of macro data. However, there's likely to be a busy slate of public remarks from FOMC officials who resume their efforts to talk back rate-cut expectations.

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 next week for another market recap.