Good morning, traders; Welcome to our market week preview, where we look at the economic data, market news and headlines likely to have the biggest impact the price of gold this week and beyond, as well as market prices for silver, the US Dollar, and other key correlated assets.
Gold prices have slid steeply in the first hours of US trading on Monday.
Following a stable overnight session to begin the week, gold’s fall this morning is a direct result of this morning’s headlines out of Washington that the Biden Administration will (re)nominate Jerome Powell to remain in his post as Chairman of the Federal Reserve. While Powell remaining at the helm does not, in itself, have any strong implication for the medium- to long-term path for policy rates or other important inputs for gold prices, US Dollar markets are giving it a strong vote of confidence and the Greenback has spiked on the news, leading to the sharp drop in gold’s spot price. At the time of writing, the yellow metal has slowed its decent and is feeling out a line of support around $1820/oz.
This announcement from the White House clears one of our big unknowns off the table for the week ahead, but with the trading calendar curtailed by Thursday’s Thanksgiving holiday there’s still a potential for some wonkiness as market liquidity might be noticeably thinner as we approach the holiday (and on Friday.) Shallow markets are liable to amplify moves like we saw this morning.
For now, let’s look at the rest of the compacted calendar ahead.
US Economic Data to Watch
Wednesday, November 24 at 830am EST // PCE Price Index (Oct)
[(core PCE) consensus est.: +4.1% YoY // prev.: +3.64%]
[(headline) consensus est.: +5.1% YoY // prev.: +4.58%]
Wednesday, November 24 at 830am EST // Personal Spending Income (Oct)
[(spending) consensus est.: +1.0% MoM // prev.: +0.6%]
[(income) consensus est.: +0.2% MoM // prev.: +0.2%]
Because much the data that feeds into the Fed’s calculation of inflation in the US economy (CPI, import prices, etc.) is already publicly available for the month of October, there’s little chance that the number released on Wednesday will be truly surprising; But, given the reaction to a stronger-than-expected headline number in the CPI reported earlier this month, gold traders (and Dollar, and US Treasury traders) should be on alert for a knee-jerk reaction to the overall PCE number rising above 5%. October’s CPI surge resulted in investors reaching for safety against projected inflation, driving the price of gold higher (although that’s no guarantee that the market will move in the same direction this week.)
Investors and analysts who have been worried about rising inflation curtailing US consumer activity in the holiday season will be keeping an eye on personal/household spending numbers (this month and next.) Any unexpected shakiness there could send the markets risk-off ahead of the Thanksgiving holiday.
Wednesday, November 24 at 830am EST // Initial Jobless Claims
[consensus est.: +261K // prev.: +268K]
With holiday seasonal hiring coming through in the last months of the year we may see a steeper drop towards 200,000 in the weekly claims number. For now, it looks likely to continue a steady slope lower, signaling another encouraging monthly Jobs Report at the end of this month.
Wednesday, November 24 at 2pm EST // FOMC Meeting Minutes
With this morning’s news from the White House, it’s safe to assume that the track laid down by the Fed in the November meeting which kicked-off the long-awaited taper remains relevant for our projections into 2022. Comments from Richard Clarida late last week rattled charts for the Dollar and gold when the (outgoing) Vice Chair of the Fed suggested that recent data (October’s CPI data most of all) might compel the FOMC to discuss a faster taper at the December meeting. In parsing the discussion minutes due Wednesday, analysts and Fed-watchers will look for clues to just how sensitive the FOMC, as a voting body, might be to pressure from inflation (or labor market data.) As always, shifts towards a faster taper remain a strongly bearish signal for gold prices in the near term.
And that’s how the week lays out ahead of us, traders. As always, I wish you all the very best of luck in your markets in the coming days, and I’ll look forward to seeing you all back here at the end of the holiday week for our market-week wrap up.