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 the price of gold this week and beyond, as well as other key correlated assets.

Gold prices are lower on Monday morning, having taken a considerable step back since markets re-opened on Sunday evening.

The spot price for gold has haven back most of the gains made on the back of last week’s hot inflation data, presumably because the next knock-on effect of the CPI news is investors positioning for the Fed to be more hawkish through the medium term (evidenced by the Dollar continuing its bull run, while Treasury yields rise with the 10-year now at 3.25%.) We’ll see how profitable this positioning is come Wednesday when the FOMC announces their next policy move, as well as updated projections for US economic growth. This week’s Fed Day will be the deciding factor for which direction gold prices head, not just this week, but through the rest of the month.

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

US Economic Data to Watch

Wednesday, June 15 at 830am EDT // Retail Sales (May)

[consensus est.: +0.1% MoM // prev.: +0.9%]

Was last Friday’s over-heated inflation report more indicative of where the US consumer and their economy are headed in the months ahead? Or do we put more weight behind the previous week’s Jobs Report for May, which was strong enough to push back rising talk about a recession in the fall? Certainly, it will be a while longer before we can really say, but this week’s Retail Sales report will give us a good indication, is as much as we’ll see if consumers still have a healthy interest (as is generally expected) in getting out and spending their money, or if American’s are cautiously shading towards saving over spending. The former would support those with confidence in the Fed and their plan to slow the economy into a “soft landing” while cooling inflation—as such it’s less of a positive signal for gold; the latter would be more ammo for those arguing that the US is already riding dangerously close to a recession and that current of instability will likely benefit safety play like gold (perhaps even more directly than it would the US Dollar.)

Wednesday, June 15 at 2pn EDT // FOMC Interest Rate Decision

[The FOMC is widely expected to raise their overnight policy rate target (for the third consecutive meeting) by +0.50% (for the second consecutive hike.)]

The big question for this week’s Fed Day has changed on the heels of last Friday’s CPI report which showed inflation all over the US economy behaving as anything but “transitory” and even somewhat resistant to the Fed’s campaign to gently slow US economic growth to cool price pressure. Now, traders, investors, and Fed Watchers will be looking to see how Jerome Powell & Co. responds to the disappointing data set, directly or otherwise. With the Fed almost certain to stick with the projected +0.50% hike (a monumental 75-bp hike still seems a bridge too far for the central bank,) the place most expect to see a change is in the language of the Fed statement, which may now refer to the consecutive 50-bip hikes in a way that suggests that not only will these “double” hikes continue through the summer, but that the degree of forward progress that the FOMC will need to see before slowing down to “normal” +0.25% hikes (to say nothing of a full pause) is now a high bar. All said, this sounds like generally negative news for gold prices, so the yellow metals might have rough waters to endure on Wednesday.

Of course, the Fed reaction function isn’t so cut and dried for gold (or other assets closely tied to the Dollar, or the Dollar itself) this week, given that we’ll also get the quarterly updated Staff Economic Projections. The median medium-term projections are likely to move higher, and this could give gold (in its role as an inflation hedge) more reliable support than spot price might expect on a Hawkish Fed Day.

Friday, June 17 at 845am EDT // Fed Chair Powell Address

We typically have a whole “FedSpeak” section for this sort of thing, but given the pre-Fed Day quiet period there’s only one appearance. Worth mentioning this week so we’ve slotted it here. Powell is giving opening remarks at the start of a Fed-hosted conference, so, with no Q&A likely, there won’t be an opportunity to pepper the Chair with questions about Wednesday’s FOMC decision that won’t have made it at the post-FOMC presser. That said, the whole theme of this conference is the US Dollar (particularly, its role within the international banking system); comments from the head of the US central bank about the present and future states of the Dollar have a good chance of moving the Greenback in the markets on Friday, while the gold price is likely to move in the opposite direction.

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.