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 in the price of gold this week and other key correlated assets.

Gold prices have begun this week on the slide, coming under pressure since Sunday evening as US Treasury rates move sharply higher to kick-off the final trading days of May 2022. There have been more promising signs for the yellow metal as the US session has begun, with gold finding support again near $1940/oz as the surge in bond yields has cooled.

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

US Economic Data to Watch

Wednesday, March 30 at 815am EDT // ADP Employment Report (Mar)

[consensus est.: +450K // prev.: +475K]

Taken as a whole, the monthly labor market data on delivery for this weekend is expected to be strong but not the major improvements that we’ve seen from month-to-month since the start of the year; so it’s possible that there will be more muted market reactions to the numbers. In theory, the market reaction to ADP’s count of new private payrolls jobs for the month should always be a little toned-down, since there isn’t the correlation between the Wednesday number and Friday’s NFP that many believe to be there. That kind of rationality has yet to stop investors from over-reacting to a good or bad ADP number, and the added attention that recent Fed comments has put on the US labor recovery might only exacerbate this. As we usually day, it’s best to just be on the lookout for volatility here rather than a directional slant.

Thursday, March 31 at 830am EDT // PCE Price Index (Feb)

[(core PCE) consensus est.: +5.5% YoY // prev.: +5.21%]

[(headline PCE) consensus est.: +6.4% YoY // prev.: +6.06%]

Since the market has already seen and digested the CPI, PPI, and other inflation reads that feed into the Fed’s PCE number, there should be little this data set can tell us this week that the FOMC hasn’t communicated repeatedly since the March meeting: that inflation has remained high enough for long enough that the central bank has to act against it rather than (as in 2021) waiting for it to ebb on its own; and that it will continue to remain elevated until the Fed’s rate hikes (and other instruments) take hold. Barring a truly surprising dislocation above or below expectations, gold prices, the US Dollar, and other watched assets should trade smoothly through this release.

Thursday, March 31 at 830am EDT // Initial Jobless Claims

[consensus est.: +200K // prev.: +187K]

Last week’s Jobless Claims number surprised analysts and investors by dropping to the lowest level since the late 1960s, although any market reaction to the news was mostly overtaken by focus on the Fed and the war in Ukraine. Analysts will watch this week to see if the (anticipated) modest rebound to 200K comes through, or if the number moves even lower. Were the latter to happen, it’s probably a moderate headwind for gold prices: both as a risk-on signal for investors and also the implications for aggressive tightening from the Fed.

Friday, April 1 at 830am EDT // March Jobs Report

[(NFP) consensus est.: +490K // prev.: +678K]

[(unemployment) consensus est.: 3.7% // prev.: 3.8%]

As we’ve mentioned already, following the March FOMC meeting, Fed Chair Jerome Powell has underlined how important a continued US labor marked recovery will be to the overall US economy’s ability to withstand the pressure of the aggressive rate-hike path which the central bank now deems necessary to mute inflation. Through this function, we think it’s fair to expect that, in terms of the gold market, a strong NFP number will be the same as any other indication that the Fed could hike by a double-move of +0.50% at the next meeting. That is to say: likely a bearish signal for gold prices.   

Friday, April 1 at 10am EDT // ISM Mfg. Index (Mar)

[consensus est.: 59.0 // prev.: 58.6]

Oddly-placed at the end of the week, the key read on growth in the manufacturing sector looks set to be over-looked this week, in terms of an immediate market reaction; expect investors, broadly, to either be still parsing the March Jobs Report dropping earlier in the morning, or else generally tuned-out ahead of the weekend. For modeling the US economic recovery (mostly pre-hike,) economists and analysts expect the industrial sector to have continued a strong pace, indicating that there is likely plenty more appetite for interest rate hikes despite any acute negative reactions from the stock market.

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.