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 in the future.
Here’s what you need to know:
- Gold fell more than 2% this week, snapping an eight-week winning streak amid heavy profit-taking.
- ETF outflows and muted trade war headlines weakened buying momentum, pushing gold briefly toward $4,100/oz.
- A softer-than-expected CPI report on Friday revived optimism for another Fed rate cut, stabilizing gold above $4,100.
- All eyes now turn to next week’s FOMC decision, with traders watching Powell’s remarks for direction amid the ongoing government shutdown.
So, What Kind of a Week Has It Been?
Gold prices have reeled back considerably this week, as the recent surge in speculative buying in gold (and other precious metals) appears to have retreated—or at the very least, been overtaken by investors moving to lock in profits with gold trading at or near all-time highs. The more fundamental appeal for investing in the yellow metal remains steady, however. Despite a week-over-week decline of more than 2% and likely the first weekly drop in gold prices in more than two months, the market is still demonstrating reliable buyers and support well above $4,000/oz.
Fed Quiet Period and Trade War Easing
The same trading themes have continued to dominate investors’ and managers’ attitudes about gold valuations, but with FOMC participants entering a “quiet period” ahead of next week’s meeting and interest rate decision, updates to that narrative have slowed to a trickle. Similarly, until the close of this week, pronouncements and reporting around the US’s various bilateral trade wars have been muffled. And what has been reported, particularly regarding new ad hoc tariffs announced on Chinese imports, has carried a dovish tone.
As a result, two of the strongest contributors to the market’s recent risk-off sentiment—fears of an escalating trade war and uncertainty over the Fed’s next move—went cold this week. Without new upward momentum, gold prices began to drift lower on Tuesday as traders and money managers moved to take profits. By Wednesday afternoon, led by significant outflows from gold ETFs, gold’s price had fallen more than $200/oz to $4,100, from Monday night’s high above $4,375.
Inflation Data Sparks Friday Rebound
Going into Friday’s US session, gold looked vulnerable, with questions about whether another round of profit-taking would push prices closer to the $4,000 support level. The outlook shifted, however, with the long-delayed release of September’s CPI report. Inflation accelerated month-over-month, but by less than anticipated (+3.0% vs. +3.1% expected). The modestly cooler reading boosted confidence that the Federal Reserve will cut rates again next week.
US equities rallied on the news, and gold—after dipping to $4,050 overnight—rebounded sharply following the CPI release. By Friday afternoon, the metal appeared set to close the week near $4,125/oz.
Looking Ahead: All Eyes on the Fed
We expect the macro data vacuum to persist next week, with little sign that the US government shutdown will end soon. This points to heightened volatility on Wednesday, when the FOMC delivers its interest rate decision and Chair Powell holds a post-meeting Q&A. Traders will be looking for clues about how the central bank views the shutdown’s impact on the economy and its upcoming monetary policy plans.
In the meantime, traders, I hope you can get out and safely enjoy your weekend. After that, I’ll see you back here next week for another market recap.
