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 have taken a slide to start this week’s trading, largely as a result of another spike in the US Dollar overnight, which brought the Greenback’s strength, relative to its primary trading partners, to a new 20-year high.

The Dollar’s Sunday surge can be attributed to investor reaction to last Friday’s fairly hawkish Jackson Hole address from Chair Powell, but also, in a repeat of last week’s start, a correlated drop in the Euro as the Continent grapples with what looks to be an increasingly severe energy crisis. Whether gold prices can stabilize on Monday, as they did in a similar environment last week, will the today’s first question as the market opens.

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

US Economic Data to Watch

Thursday, September 1 at 10 am EDT // ISM Manufacturing Index (Aug)

[consensus est.: 52.0 // prev.: 52.8]

Even if the Fed manages to pull off something close to their targeted “soft landing,” tightening financial conditions just enough to quell inflation without tipping the US economy into a full-blown recession, it’s becoming clear that factors outside of US borders may need to be reckoned with sooner than later. August’s data on expansion in the US manufacturing sector may be a good demonstration of this, as the overall survey is expected to represent tepid growth thanks in part to worsening outlooks for many of the US’ global trading partners (which dampens demand for the fruits of US manufacturing,) especially Europe and its burgeoning energy crisis. A lower ISM point this week likely shifts investor sentiment into a more risk-off mood (if it moves investors at all,) which may boost gold prices on Thursday if the preference for the Dollar fades. 

Friday, September 2 at 830am EDT // August Jobs Report

[(NFP) consensus est.: +285K // prev.: +528K]

[(unemployment) consensus est.: 3.5% //prev.: 3.5%]

“The Consensus” has a pretty poor recent record of projecting the non-farm payrolls number for the last several months, although the bright side is that the actual numbers have been outperforming expectations. So, that’s certainly a possibility once again, with the August Report, but even if the number that comes in is above consensus it is hard to see it rising above July’s blowout job growth. There doesn’t appear to be any outcome for this week’s labor market data, other than a major miss to the downside, that benefits gold prices in the near team - as strong as - expected (or better) point looks likely to drive the Dollar higher on US strengths alone, but also because it makes clear the path for the Fed to follow through on its plans to raise rates and keep them (relatively) high for as long as is needed to cool inflation. 

FedSpeak this Week

The key takeaway from Fed Chair Jerome Powell’s Jackson Hole speech last Friday was that Fed is still wholly wrapping its arms around its plan to keep rates (relatively) high for however long it takes to really slow inflation in the US, even if there is some collateral damage done. Or, as many have taken to calling it, “higher for longer” rates. The work of watching commentary from other key Fed officials this week will be to see how committed the rest of the FOMC is to this outlook and where there might be red lines to avoid crossing.

Monday: Fed Vice Chair Lael Brainard (FOMC voter) (215pm EDT)

Tuesday: Richmond Fed President Thomas Barkin (non-voter) (8 am); New York Fed President John Williams (FOMC voter) (11 am)

Wednesday: Cleveland Fed President Loretta Mester (FOMC voter) (8 am)

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.