GoldPrice.

Good morning, traders. Welcome to our weekly preview of the economic data calendar for the next five days, along with the key narratives driving financial markets, focused on the inputs that could have the most impact on gold prices along with the Dollar and other correlated assets.

It’s a bit unbelievable to say given the extraordinary volatility we saw in gold and other major assets overnight, but: ahead of the US market open, gold prices are trading relatively flat to last week’s close. That number, of course, belies what has already come at the very start of the trading week.

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Shortly after global markets opened last night, the yellow metal rose above $1700/oz for the first time since 2012 as markets reeled from the weekend’s developments. Namely, just as last week ended with some feeling that markets are starting to come to grips with the extent of the Covid-19 crisis’ damage to the global economy, a sudden breakdown of relations between OPEC members and Russia has us speeding toward an oil price war that nobody needed right now.

The resulting market actions have been astounding. Oil prices have fallen by more than 30%, pulling huge parts of the raw commodities complex lower with it. As the flight to safety has accelerated, the Yen has surged as well, and the entire US debt yield curve is now below 1% for the first time. Maybe most importantly in the short term, US equity index futures triggered “circuit-breakers” overnight when the loses reached 5%-- so we’re flying more than a little bit blind into the market open in New York.

Oh, also: there’s still a global health crisis in play. Happy Monday, everybody.

Gold prices were unable to hold their perch at $1700 of course. As profit-taking stop were triggered around such a big psychological number, the commodity-selling pressure that has pinned the more industry-sensitive silver prices lower has taken its toll on gold; the unprecedented flood into other safe havens like US Treasuries and the Yen also indicate some level of rotation out of gold because of that tether to the broader commodities fall. At the time of writing, gold has calmed (relatively) around $1675/oz as we get set for the full US market open.

In the meantime, let’s take a look at what is a very light economic calendar this week.

US Economic Data to Watch

Wednesday, March 11 at 8:30am ET // Consumer Price Index (Feb)

[(core inflation) consensus expectation: +2.3% YoY // previous: +2.3%]

[(headline inflation) consensus exp.: +2.2% YoY // prev.: +2.5%]

Last week’s emergency rate cut from the Fed, driven by the risk of deep economic drag created by Covid-19’s global spread, has almost certainly adjusted the FOMC’s outlook with regards to what macroeconomic benchmarks would justify (or compel) either a re-tightening of rates or another cut. Unfortunately, with the impromptu move coming just ahead of the blackout period leading up to next week’s FOMC meeting we don’t have much to go on in the way of anticipating the degree of that shift. For now, we’ll keep tracking the key metrics like inflation and the labor market has we have in recent months.

With that in mind, the majority of analysts are expecting a stable and uneventful read from February’s consumer inflation data. Generally, it’s thought that we won’t see a big dent in price growth due to the health crisis although some chatter suggests the impact could be felt in the travel and accommodation spaces so I think there’s slightly more downside risk to the consensus projection for core inflation. The headline number will probably have the usual weakness from lower energy prices; given that that weakness looks grow considerably this month, I’ll be interested to see the market reaction to it. Overall, the prior month’s CPI data was similarly strong and steady and so I’m expecting the same muted reaction from a gold market that is focused on the Covid-19 pandemic.

Thursday, March 12 at 8:30am ET // Producer Price Index (Feb)

[consensus exp.: -0.1% MoM // prev.: +0.5%]

Energy prices always weight a little heavier on the less diverse PPI number, and we’ll expect to see that reflected in February’s data as a small 10 basis point decline versus the prior month. It should be of little concern following behind a strong outperformance in January; overall, it’s hard to see Dollar or gold markets making a lot of action on producer price data with everything else going on. That said, if we saw a considerable, unexpected decline in either inflation metric before the OPEC+ spat leaves a mark, that could push the fear gauges higher.

Thursday, March 12 at 8:30am ET // Initial Jobless Claims

[consensus exp.: +217k // prev.: +216k]

Friday, March 13 at 10am ET // Univ. of Michigan Consumer Sentiment (Mar)

[consensus exp.: 95.0 // prev.: 101.0]

Analysts expect the first drop in consumer sentiment since last summer, as the gloom of dropping stock prices and coronavirus worries has been darkening the general outlook. Any reading above the low-90s is probably a non-event given everything going on this week, and the U of M data always gets a little muddled by end-of-week profit taking.

FedSpeak this Week

As I mentioned, with the next FOMC meeting scheduled for next week, we’ve entered the communications blackout period for Fed officials. I expect a lot of shouting from TV pundits who know for sure that the Fed will/won’t make another move; while I honestly think it’s very difficult to judge with any certainty right now, I am willing to say that I think it’s slightly more likely that they do not cut further.

Global Economic Data to Watch

Thursday, March 12 at 6:45am ET // ECB Interest Rate Decision

Many analysts and watchers all anticipate that the European Central Bank will join it’s developed market partners in easing monetary policy this week, though with less severity because, frankly, the ECB doesn’t have a lot of room to make conditions easier. Technically speaking, analysts expect another 0.1% cut in the already negative deposit rate, with some also seeing an outside chance that the central bank may increase (or signal an increase of) their current QE purchases. We’ll look for a move in the Dollar around the news and the press conference that will follow as the Euro will likely weaken; gold prices could move in response, depending on the severity of the shift in currency values and what kind of technical levels the yellow metal is enjoying at the time.

And that’s how the next five days lay out for us, traders—at least in terms of what we can see coming. As always, I wish you all the best of luck in your markets this week, and I’ll see everybody back here on Friday for our market wrap.