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.
Following some overnight volatility coming out of the long Labor Day weekend in the US, gold prices are steady and marked roughly on par with last week’s closing prices.
While the slate for economic data and other scheduled events that may impact trading in gold, the Dollar, or other key assets classes is very light this week, we can still expect more active trading than was in play for most of August as the majority of market participants on both the professional and retail sides should be back on the field now that we have reached September and are headed into a pivotal phase for the US economy.
For now, let’s take a look at what’s on the calendar ahead.
US Economic Data to Watch
Tuesday, September 6 at 10am EDT // ISM Services Index (Aug)
[consensus est.: 55.5 // prev.: 56.7]
Last week’s print of the manufacturing sector-focused version of the ISM survey came in better than expectations (which is to say, it held the line rather than weakening month-over-month.) The overall market reaction was a little counterintuitive, but one that has become the standard for 2022: investors pulled back from the stock market, despite the objectively positive signal, and gold spot prices fell; all in reaction to the Dollar strengthening as investors felt the healthy data point further cleared the path for the Fed to remain hawkishly aggressive for some time to come. On Tuesday morning this week, we’ll be looking out for a similar reaction if that data beats consensus. (It remains hard to say with conviction whether the gold or Dollar markets would have a trackable reaction to a miss to the downside.)
FedSpeak this Week
As we barrel towards September’s FOMC meeting—the first of 2022’s final three meetings—this month’s questions swing around whether the Fed will feel compelled to reduce the pace of rate hikes to +50 basis points, from +75. As has been the case all year: Indications from Fed commentary towards the central bank mellowing out the aggressive curve of monetary policy tightening would likely slow the US Dollar down, allowing gold (along with US stocks,) to rally. Conversely, signals that the Fed will continue as it has since the spring will keep the Greenback at its eye-watering levels (or higher) and continue exerting downward pressure on gold.
Wednesday: Fed Vice Chair Lael Brainard (FOMC voter) (1235pm EDT)
Thursday: Fed Chair Jerome Powell (FOMC voter) (910am)
Friday: Fed Governor Christopher Waller (FOMC voter) (12pm)
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.