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.
 

Gold prices are ending this week at a new all-time high, well north of $2400/oz.

So, what kind of week has it been?

If last week’s trading delivered our first signal that the gold market was shifting projections and positioning to focus on renewed hopes for earlier interest rate cuts, this week’s trading has made it clear that traders (in the precious metals and elsewhere) may be fully tuning out the FOMC’s efforts to talk-back that expectation, in favor of trading on macroeconomic data that makes the case of earlier cuts more reasonable. The result for gold spot prices has been a strong rally in the second half of the week that has brought the yellow metal to new all-time highs.

Gold spent the first part of this week re-consolidating a position of strength above an eye-watering line of $2335/oz following a considerable re-pricing last week. While everyone had gone home on Friday wondering if profit-taking sales would dampen the new rally, the first Asian and European sessions of this week saw strong interest in gold buying.

This initial, slow-rolling rally through Monday and Tuesday also coincided with some clear monetary policy remarks from Fed Chair Jerome Powell, in which the head of the Federal Reserve had no hesitation about expressing that the Fed sees the inflation remaining hot enough that the FOMC still plans to hold rates in place for some time. Up until just recently, we would have looked for a volatile market response in gold, the US Dollar, and other assets. For gold, the move could have been down (if investors mostly bemoaned the persistence of higher rates) or higher (if investors stayed locked into worries of the economic stress fractures those persistently higher rates could bring); either way, the impact would have been felt. This week, however, the gold market seemed—for the first time in quite a while—to just ignore Powell. The moderately-paced gold price rally continued on, bringing the chart into the $2360 neighborhood by Tuesday night.

The real fireworks and the clear disregard for Powell’s remarks went off on Wednesday morning with the release of the latest Consumer Price Index reporting. Here, the key readings (primary among them the headline and the “core” CPI annualized numbers) came in as expected, indicating a slight cooling compared to the previous month. Investors seized on this as if it must be the first step in another downward slide for inflation pressures following the stubborn persistence of recent months. Gold prices zipped to just below $2390/oz for the first time, with the rally likely being spurred on to some extent by the Retail Sales number for April, which indicated surprising weakness in the sector—another compliment to the argument that the Fed did not only can but maybe should start cutting soon.

Friday’s final leg higher for gold has been pushed on by an announcement overnight of new economic stimulus in China. At the close of the week, gold prices have soared to well above $2400 for the first time ever, and its gains don’t appear to be under pressure from profit-takers at Friday’s close.

Next week will pose a challenge to investors’ will to disregard messaging from key FOMC officials: with a sparse data calendar, FedSpeak will be expected to be the dominant input to market sentiment.

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.