Good afternoon, 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 are trading roughly flat through the first hours of Monday’s US session if just a few dollars below Sunday evening’s opening bids.
Negotiations around the US debt ceiling and its potential implications (mostly in the event of ridiculous gridlock) for the US rates market will continue to be the dominant driver for not just gold but also for the US stock markets. Like gold, the key equity indexes are running mostly flat on Monday, displaying a real lack of anything approaching certainty on the part of investors about where this week’s narrative will drive markets with just ten days to go before the (mostly self-imposed) “debt ceiling deadline.”)
US Economic Data to Watch
Wednesday, May 24 at 2 pm EDT // FOMC Meeting Minutes
While it, of course, wasn’t a cut-and-dried promise to pause interest rate hikes in June, the FOMC did make what its leadership called a “meaningful change” to the agreed-upon statement to hold open the door for such a decision next month. Given the waffling we’ve seen in the 11th hour of debt ceiling talks, even since just Friday afternoon, it’s not impossible that the only input offering sustained support for the US stock market over the last two weeks has been that expectation that June brings a pause (as a first step to moving into a rate-cutting cycle.) That certainly has seemed the case for the gold market, although the shiny metal is obviously more adversely impacted by the budget talks. The discussion notes and minutes from that May meeting will be the highlight of the macroeconomic calendar this week, with a focus on how the committee came to a consensus on the June forward guidance. Any insights that affirm a pause as more likely (and more potentially impactful) should be a boon for gold as spot price tries to remain within touching distance of $2000/oz; US equities should benefit from the same (and equally suffer from the opposite signals) through the end of the week. Crucially, what we can’t quite project is how the debt ceiling negotiations will (more strongly) impact the marketplace.
Friday, May 26 at 8:30 am EDT // PCE Price Index (April)
[(core PCE) consensus est.: +0.3% MoM // prev.: +0.3%]
The PCE Price Index metric for inflations in the US economy—the “Fed-preferred” read, in fact—more often than not aligns with the data set we get a few weeks prior for the same time series in the Consumer Price Inflation report. As such, there’s not usually much trading volatility in the gold chart or elsewhere when PCE prints. That said, the April consumer inflation numbers outperformed expectations just enough that investors and economists may be looking to this week’s closer to confirm (or otherwise) that continual improvement in the inflation picture. If it does, it may again be a lose-lose situation for gold as the interpretation would negate the yellow metal’s allure as an inflation hedge while also suggesting that the Fed isn’t going to be forced to pause this summer.
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 next week.