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 may continue to into the future—as well as the charts for silver, the US Dollar and other key correlated assets.

Gold prices are trading at a severe discount to prices at the start of the week, as Thursday night tailwinds that looked to help spot prices re-take an important support level at $1800 were snuffed out by investors around the global swinging aggressively risk-off as worry spreads regarding a potential threat from a mutated Covid-19 strain appearing in parts of the globe ahead of winter.

So, what kind of week has it been?

Ahead of schedule, we already covered the biggest market-mover (for gold) in a quiet holiday week in Monday’s preview piece: The pre-market news that the Biden White House will be nominating Jerome Powell to continue on as Chair for the Federal Reserve was received by the markets as the most stable decision for the near- to medium-term progress of the US—and global—economy. Although there was really never much chance that things would go another way, the reaction particularly in US Dollar markets was strong, with the greenback surging higher immediately as the headlines crossed the transom. Accordingly, gold spot prices fell aggressively while 10-year Treasury yields jumped back above the recent pivot at 1.6%.

Monday evening, as overseas markets got the chance to process the Powell news through pricing in their own sovereign bond markets, pressure on the yellow metal resumed and pushed spot prices below $1800/oz for the first time in weeks. Spot prices managed to find support by early Tuesday morning and began consolidating. From there, probably thanks in part to lightly-attended trading in the US ahead of Thanksgiving, gold’s chart smoothed out; there were a few stretched that demonstrated that prices remained sensitive to spikes in bond yields, but all-in-all gold remained stable around $1790/oz through the US holiday.

That stretch of relative inactivity for gold (and other assets) also included the release of the week’s most relevant economic data:

• The US consumer in October seemed generally undeterred by higher prices as the rate of personal spending rose 1.6% on the month, aligning with the strong Retail Sales numbers we saw last week.
• The Fed’s own calculation of inflation in the US economy came in as expected, and this time there was no knee-jerk reaction in markets to the elevated numbers.
• In a strong signal for next week’s November Jobs Report, the number of new unemployment claims filed in the measured week fell below 200,000 to the lowest number in over five decades.

So far, Friday’s markets have attempted to match the Monday morning energy. Reports that began emerging on Thursday afternoon of a worrying new strain of Covid-19 surging in southern Africa have dramatically unsettled financial markets and overrun what otherwise would’ve been a subdued session. Asian and European equity markets fell markedly, and the corresponding rise in bond prices dropped yields and encouraged the first signs of life on gold’s chart since the start of the week; Gold spot price made strong gains in the thick of the European trading session, managing to climb above $1810/oz briefly.

The start of US trading to wrap the week, however, accelerated the rally in bond prices to such a degree that nearly every major asset class—including gold—has been caught in very choppy waters on Friday morning. As the benchmark yield on 10-year US Treasury notes has dropped so far as to briefly dip below 1.5%, gold’s spot price has fallen all the way back to $1790/oz and slightly lower; an erasure of the overnight session’s gains. The damage is worse in other key asset classes that didn’t have gold’s cushion to start the day: crude oil has taken its sharpest daily loss of the year, and all three major equity indexes in the US are looking at pullbacks of more than 2% (at the time of writing.)

From a gold trading context, the plummet in crude oil prices is notable as it corresponded with a plunge in the overall commodities basket, including silver prices which initially took a much harder hit than gold. Drag of market losses in commodities across the board could dampen any potential rebound for gold next week. Also significant for gold’s outlook will be the shift we’re seeing on Friday in markets’ projection for Fed policy: With investors rattled around the globe, futures traders have moved the consensus bet for the first rate hike in 2022 back from June to September. If other pressures on gold price subside a bit, this dovish half-step could provide some degree of tailwind for gold.

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 on Monday for our preview of the week ahead.