GoldPrice.

Happy Friday, traders. Welcome to our weekly market wrap – and our final May roundup – where we examine some of the most notable economic news, market conditions, and other external forces that impacted how gold performed this week.

Let’s get into it, folks.

The Setup:

Part 1 was great, but the sequel is all over the place …

If gold were a movie, that might be a fitting sum-up to describe what’s befallen the yellow metal in just the past 12 days. Here we were on May 20, when gold hit an all-time high of around $2,450 per ounce, and some gonzo bulls were even manifesting scenarios where it could easily hit $3,000 or even $4,000 an ounce. Traders had a full-blown blockbuster on their hands, and the sky was the limit, right? Cut to Friday, less than a fortnight later, and Gold Part II: The Revenge of King Yellow is in a slump, trading at $2,322 per ounce, down more than $21 at one point this afternoon.

What Happened This Week?

Like many of its precious metal counterparts, gold seemed like it couldn’t catch a break in the shortened trading week. It seemed whatever modest gains it made, there was either a sobering economic data dump from the government or a public comment uttered by a member of Jerome Powell’s Policymaking Posse taking true believers to task. Silly traders, it’s too soon for us to even consider cutting interest rates now because there simply isn’t enough consistent data to prove our current restrictive economic policy is working to lower inflation toward our 2% benchmark. Never mind the fact that interest rates are at a 23-year high. Never mind that the larger economy is showing signs of resilience across key sectors, and the labor market continues to stay robust. Never mind that we penciled in up to three rate cuts in 2024 and have yet to deliver the first one. C'est la vie at the Fed, right?

Still A Golden May

Facing those kind of headwinds would be enough to send any commodity reeling. Thankfully, gold’s still got a lot going for it because of its built-in value as a safe-haven asset, especially during trying financial times and global unrest, of which there’s plenty these days, between the wars in Ukraine and the Middle East and jitters at home as we close in on the presidential election.

And even though gold has been uneven in trading this week, it’s still going to close out a dynamic May, posting its fourth consecutive monthly gain. It’s up more than $40 per ounce month over month and nearly $367 per ounce year over year – up nearly 19% over this time in 2023. That’s certainly nothing to sniff at, especially considering that the current geopolitical landscape, industrial demand, and desirability as a reliable commodity to own in uncertain times suggest gold may just be having an off week.

When’s The Reboot?

Maybe as soon as next week.

As of this writing, there’s a grand total of zero members of Powell’s Posse scheduled to deliver remarks next week, as opposed to the seven who spoke this week, sending traders running for the Tums. And the scheduled economic reports shouldn’t be as heavy as the data released today and earlier in the week.

And, filing in the Something’s Gotta Give folder, those hopeful of seeing some speck of daylight, or at least a roadmap forward on rate cuts, seem locked in a battle of wills with the Fed, which, at least at present, is firmly holding the line on the 2% inflation benchmark. Yet there are signs of improvement in the overall economic picture, and the labor market remains strong. The question remains: How long will Powell & Co. hold fast to a restrictive monetary policy that’s bringing pressure to bear on the economy before policymakers realize they may need to cut rates sooner than later?

Next week, we start fresh with a new month and renewed hopes for another blockbuster.

Have a great weekend.