GoldPrice.

Good morning, traders; welcome to our market week preview, where we take a look at the economic data, market news and headlines likely to have the biggest impact on the price of gold this week and beyond, as well as other key correlated assets.

Gold prices, in an improvement from last week’s patterns, appear to be holding on to the gains made in European trading hours (thanks to the Dollar remaining soft as well.) A few hours into the first US trading session of the week, gold spot prices trade at a healthy premium to last week’s close.

This will be the first week in a while that is relatively front-loaded, with CPI data due Tuesday and little else to follow; the FOMC is in the pre-meeting blackout period ahead of next week’s gathering. This suggests that, for investors in many asset classes including gold and the US Dollar, the reaction to Tuesday’s inflation update will have a long tail through the rest of the week.

For now, let’s take a look at the whole calendar ahead.

US Economic Data to Watch

Tuesday, September 13 at 830am EDT // Consumer Price Index (Aug)

[(core CPI) consensus est.: +6.1% YoY // prev.: +5.9%]

[(headline CPI) consensus est.: +8.0% YoY // prev.: +8.5%]

Presuming that the primary numbers at the top of Tuesday’s CPI report come in relatively close to expectations, the storyline for the day (the week, really) should be that inflation is continuing to slow, slowly, from the summer’s peak; even though the “core CPI” number may be flat or slightly above July’s print thanks to prices in the services sector remaining hot in last month. On its own, we would expect this return to be bearish for the gold market, as indications of lower inflation pressures and expectations historically cool investor demand for gold as a safe haven. The twist, of course, will be trading around the macro market reaction—would this suggest that the Fed’s campaign to cool inflation is working, and they will slow the pace of tightening (via rate hikes) sooner (which would be a positive tailwind for gold prices); or would it suggest that the Fed will be emboldened to maintain an aggressive pace to “finish” the job faster? (This would imply higher rates remaining, and applying pressure to valuations for gold, for longer.) How the market takes in and digests this data will likely set the tone not just for Tuesday morning, but for the week that follows, given the relative lack of other primary data or news events.

Thursday, September 15 at 830am EDT // Initial Jobless Claims

[consensus est.: +227K // prev.: +222K]

New jobless claims have been dropping steadily since early August, in a positive parallel to the higher-profile Jobs Reports that reflect a still very strong labor market in recent months; last week’s read was the lowest print since the early weeks of summer. This may bring some added focus to the Initial Jobless Claims release this week (ahead of the FOMC’s assessment of the labor market at next week’s meeting,) but probably not a great deal of frothy reaction-trading in the gold or Dollar markets.

Thursday, September 15 at 830am EDT // Retail Sales (Aug)

[consensus est.: flat (MoM) // prev.: flat]

Likewise, expectations appear pretty tepid for the August Retail Sales growth data—not because consumers are sitting still; it’s more reflective of the pace of sales growth flattening out as the new school year starts and back-to-school spending ends. Unlike with Tuesday’s inflation data set, the reaction to a better or worse print for Retail Sales is easier to anticipate: signs of growth in consumer spending will be seen as another green light for the Fed to stay aggressive with their rate hikes (negative for gold) while an unexpected contraction in retail spending (assuming it would be large enough) would be expected to give the central bank pause (negative for the Dollar, positive for gold, et. al.) 

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 on Friday for our market-week wrap up.