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 market prices for silver, the US Dollar, and other key correlated assets. 

Following last week’s sharp climb higher following Fed Chairman Powell’s latest policy address, gold prices have been moderating a bit on Monday morning amid a generally quiet marketplace.

The downward correction is to be expected, as buyer probably ended up a bit over-extended in Friday’s excitement, and still leaves the yellow metal in a position to consolidate much of its gains above $1800/oz before investors reckon with an important August Jobs Report, due at the end of this week. 

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

US Economic Data to Watch 

Wednesday, September 1 at 10am EDT // ISM Manufacturing PMI (Aug) 

[consensus est.: 58.5 // prev.: 59.5] 

A number of the US’ regional manufacturing surveys for August have reported a mild stutter in the activity expansion that has been a feature of the 2021 recovery so far and maybe the most consistently positive data we’ve had through the first half of the year. Economists had been expecting a pullback, this month, particularly in light of a very strong performance in the month prior, so it’s very possible that the deeper dips are less of a worrying shock and more a case of analysts simply underestimating the size of an adjustment that they correctly projected. The consensus estimates for the ISM’s report on nationwide manufacturing activity appear to favor this latter view, looking for a slide of 1.0-2.0 points (which would leave the headline number at a still very strong level around 58.0.) 

It’s worth being aware, though, that investors might be more jittery about a disappointment here, and on other data sets as we move into August reporting which should more fully reflect the economic impact of the summer surge of the delta variant. So, for this week, it appears that a steeper fall than expected would be liable to spin markets into a risk-off mood, benefiting gold prices as a safe-haven; Conversely, an upside surprise on Wednesday’s manufacturing PMI could be a strong lift for the Dollar (at least in the immediate reaction,) which would be a strong headwind for gold. (It’s also possible that anything other than a badly disappointing print will encourage the “reflation trade” that stepped back to the fore on Friday, which could boost gold. I think the stronger Dollar reaction is more likely.) 

Thursday, September 2 at 830am EDT // Initial Jobless Claims 

[consensus est.: +345K // prev.: +353K] 

Even with the added scrutiny that Powell’s Jackson Hole speech has put on the next few months’ labor market data, the recently mild run of weekly claims data will still be mostly overlooked in a week that closes with a monthly Jobs Report due. Economists this week broadly expect another short step down in the still-elevated number of new unemployment claims each week; For our labor market models (and for gold prices on the day) it should be mostly “as you were.” 

Friday, September 3 at 830am EDT // August Jobs Report 

[(NFP) consensus est.: +750K // prev.: +943K] 

[(Unemployment) consensus est.: 5.2% // prev.: 5.4%] 

The general consensus for August’s Non-Farm Payrolls number call for a drop from the unsustainable July print that was just shy of 1 MM; beyond that, there’s a decent range of estimates about how much of a retraction we might see. Honestly, I’m a little skeptical of any one projection this time around, as the “math” behind most of them looks pretty soft and is based around imprecise estimates of how the delta variant surge may be impacting the labor market or how the cessation of federal unemployment “top-ups” in some states might be helping or hurting labor supply. 

Even if we can’t call the size of the correction ahead of time, we can be sure of the importance that investors will be placing on the key labor market data this month (and in the months ahead,) and we can be relatively confident about how investors will react if the NFP number over/underperforms expectations: A better-than-expected jobs number suggests we’re moving closer to the Fed’s criteria for beginning to taper asset purchases and (in investors’ minds still, despite Powell and the Fed’s wish to unlink the two actions) an eventual interest rate hike. Bearish for gold prices. If the NFP comes in well short of the expected range, we can assume that the Fed will require (at least) one additional month to judge that the US labor market has made “substantial” progress before tightening monetary policy. Bullish for gold prices. 

Friday, September 3 at 10am EDT // ISM Services PMI (Aug) 

[consensus est.: 62.0 // prev.: 64.1] 

The state of play for Friday’s Services PMI is roughly the same as it’s manufacturing focuses cousin (see above) in terms of what investors and economists will be on the lookout for and/or sensitive to: How badly did the first month of the delta variant’s rampaging spread across the US damage the expansion of economic activity? One big difference, though, is that the services sector has been running even hotter in recent months, and even after the moderate pullback that most analysts are projecting should still keep a historically high pace above 60. That reality joined with the fact that this data set will hit late on Friday morning after the market has started digesting a major Jobs Report, means we won’t likely see a strong price reaction in gold or elsewhere (barring a truly outsized miss or beat.) In terms of how the yellow metal’s chart would react to a surprise, expect the same as we covered in the section on Manufacturing PMI this week. 

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.