Gold prices have come into the final trading week of April continuing last week’s slide. Following the Asian session, which was roiled by news of China returning to Covid lockdowns, and a weak start to the European markets, gold prices have been falling along with most major asset classes except for the US Dollar (which continues its recent bull run) and US Treasury Bonds (as we see the benchmark 10-year yield fall back to 2.8%.) Gold, meanwhile has slipped below support at $1900/oz for the first time since the end of February.
Let’s take a look at the rest of the calendar for this week ahead.
US Economic Data to Watch
Thursday, April 28 at 730am EDT // GDP Growth (Q1 2022) (1st Est.)
[consensus est.: +1.0% QoQ // prev.: +6.9%]
We can see that the first “estimate” of GDP growth for 2022’s Q1 is expected by economists and analysts to represent a big step down from the booming quarter of growth that was recorded for Q4 2021. There are a number of cyclical factors that account of such a drop, but a very influential factor is the simple truth that it would be a difficult task to tack on similarly large surge in economic growth two quarters in a row, outside of the most extraordinary circumstances. Even though a number between 1-2% has been the consensus expectations for weeks, and could arguably be baked into asset prices, there’s always the potential for some “sticker shock” when the GDP reporting hits the wires on Thursday morning, which would push investors back into a risk-off stance. In theory, this could be a boon for gold as a safe haven, but the lesson of the last week has taught us that the real deciding factor for gold in this case will be whether investors continue to push Treasury yields higher in their rush to safety, which at the moment seems to be muting any new upside momentum for gold prices.
Thursday, April 28 at 730am EDT // Initial Jobless Claims
[consensus est.: +180K // prev.: +184K]
This week’s Initial Jobless Claims read will be the last count that amounts to an estimate of “jobs gained” vs. “jobs lost” in the US labor market before the FOMC goes in for their May meeting and (presumed) pursuant rate hike. It’s likely that this doesn’t translate to a great deal of price volatility in gold or the Dollar around Thursday morning’s release, but it’s still a point worth being aware of in the timing of this week, particularly if gold’s chart or any kind of rally that may be happening at the time is in a tenuous position. Unfortunately, for anyone with over-extended positions in the yellow metal, an unwelcome step higher in weekly unemployment numbers is at the moment more likely to be a headwind for gold (as it would probably lead to another step higher in rates and/or the Dollar ahead of anything else.)
Friday, April 29 at 730am EDT // PCE Price Index (Mar)
[(core PCE) consensus est.: +5.3% YoY // prev.: +5.40%]
[(headline PCE) consensus est.: +6.7% YoY // prev.: +6.35%]
As is usually the case with the release of a given month’s PCE data, the Federal Reserve’s preferred benchmarks for inflation in the US, the market and observers generally know what to expect because we’re already gotten the CPI numbers as well as the PPI and other price-change reporting that feeds into the PCE Price Index: We expect to see headline coverage of year-over-year inflation numbers remaining near 40-year highs, while the more granular month-to-month metrics should show hints of a slowdown (finally.) There’s no reason to expect gold market volatility around this end-of-week release, but smart traders will still keep in on their radar for an last minute curveballs ahead of next week’s FOMC.
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.