GoldPrice.

Happy Friday, traders. Welcome back to our weekly market wrap, where we focus in particular on the economic data, headlines and market news that mattered most for precious metals pricing this week, as well as for prices on silver, the US Dollar, and other key correlated assets.

Gold prices are higher at the end of this week’s trading, following what has been a volatile week across major asset classes and one that has seen gold’s spot price retake a position above $1900/oz. At the time of writing, the yellow metal is trying to ride risk-off sentiment towards a close above that level which should ensure decent support as we move into October’s book of business.

As I’m sure you’re aware, markets are trading with extra chop today in light of the news around Donald Trump’s coronavirus diagnosis. With that in mind and little time to doddle, I’ll get us right into the weekly recap.

So, what kind of week has it been?

Monday: Gold Priced Offered Signs of Life Alongside Riskier Assets to Begin the Week

When we left you on Monday, with global stock markets rebounding from last week’s drubbing and gold gaining as well, we had two questions to answer: Would the equity rally continue through US trading? And, if it did, would we see some of those investors using cash to buy into positions in gold? With a light data calendar and very little in the way of market-relevant newsflow, the answer to both our questions was a solid, if uninspiring, “Yes.”

US equity benchmarks saw strong gains across most sectors on Monday, with banking stocks leading the way in a rally that analysts ascribed to “buying the dip” once again; the S&P 500 in fact saw its sharpest improvement in a fortnight. And, indeed, the rally in risk assets was a tide that lifted all boats as gold prices benefited to the tune of nearly $20/oz gained and silver traded to $23.50/oz and higher.

Early Monday evening, gold prices continued to rise close to $1890/oz, demonstrating the slow-but-steady momentum that persisted in gold trading to start the week.

Tuesday: Investors Searching for Safety Favored Gold as the Yellow Metal Climbed Back Near a Big Number

The shotgun rally for worldwide equities faded in pretty short order from the start of Tuesday’s trading sessions in Asia, and the slump continued all the way through to a losing close of the S&P 500 on Tuesday afternoon. Gold markets, however, continued the rally higher (even as other core commodities, like oil, dipped lower) through the second market session of the week. Price for the yellow metal appreciated as investors reassessed Monday’s rally against end-of-month financial wrangling and the ever-growing certainty that no fiscal stimulus will be coming from a locked and languishing US Congress before November. Riding its status as a safe haven bet, gold made its first concerted push back towards the major psychological line of $1900/oz before slowing and consolidating gains at the end of the market day.

Wednesday: US Markets Whipsawed Around the Rumor Mill, Allowing Gold Gains to Consolidate

“Volatility” was the name of the game throughout financial markets on Wednesday (particularly in the US,) driven by developments and outlook around two key, related issue: the labor market recovery and ragged hopes for a new round of stimulus to support American industry and consumers.

In terms of the labor market, we saw signals from both directions. Early in the US morning, ADP released the monthly data on growth in private payrolls, reporting gains of nearly 100k more new hirings than expected ahead of Friday’s September Jobs Report. Analysts and observers seemed encouraged by the beat despite recent weekly labor market data being less positives, but any optimism was dampened through the course of the day by a rolling series of announcements and confirmations from major corporations and industries that they will have to lay off dozens of thousands of workers without considerable and quick aid from the US government.

Perhaps driven by a suddenly more fervent need for a rescue package, rumors swirled throughout Wednesday’s session that Congress was on the verge of agreeing to some kind of bailout plan at least in principle, before Treasury Secretary Mnuchin ultimately quashed those hopes in the afternoon. The result of so much back and forth between data points and unconfirmed reports was whipsaw day for most major assets but especially US stock markets: The S&P 500 benchmark closed the day in the green, but only picked up just shy of 1% on the session where it had previously risen nearly twice as high.

Gold prices likewise experienced some Wednesday volatility, but for the most part the yellow metal was a gainer on the day. The acceleration in equity prices during the first half of the session boosted metals prices as well, allowing spot trades to reach back to $1900/oz for the first time. The chart ran into strong resistance at the level despite a pair of solid runs, and the disappointing tone of the US’ afternoon trading saw gold giving up most of its new gains for the day. Still, it was clear by the market close that prices had consolidated the early-week rebound ahead of Thursday’s breakout.

Thursday: Gold Prices Retook $1900/oz on a Mixed News Day

From the mixed signals and impressions in on Wednesday, market participants and managers appeared to choose the optimistic bent on Thursday. Clinging to even the most vague suggestion that some kind rescue deal-making is getting done in Congress, US equity markets began the day’s session on the upswing just as most major overseas exchanges had and indeed, despite Washington’s continued efforts to damped that optimism, the key benchmarks finished Thursday in the green.

 The morning’s economic data was mixed, as we came to expect by this point in the week. Initial jobless claims dropped farther than expected in contrast to the most recent high-frequency labor market data, but the Fed’s reporting on personal/household income and spending was dour as expected: Personal Income realized a severe drop as the government’s boost to unemployment checks rolled-off in August, presaging a sharp pullback in consumer spending in the next round of data. Inflation readings took a backseat this time, with the Federal Reserve’s calculations for consumer price growth coming in more or less as expected, with some indication of acceleration.

Gold prices, as I said, got the breakout in this environment on Thursday despite rising stock prices. Ahead of the start of US trading, spot prices the yellow metal surged higher and broke through the important psychological line of $1900/oz. Profit-takers knocked prices from their high point above $1911 later in the day, but it was clear from the intraday chart that gold had already begin to consolidate support once again at $1900/oz, if not $1905. Silver prices have been less reactive to the upside this week, but it does seem like the chart has solidified well above $23/oz.

Friday: Gold Prices Are Adding to Support at $1900/oz Amid Mild Market Panic and Increasing Volatility

The market news flow on Friday has been entirely focused on the story of the US President having a confirmed, symptomatic COVID-19 infection; there’s really no other game in town as we end the week. Uncertainty has burrowed into financial markets as global investors are pivoting to a solidly risk-off stance, given that the state of play going forward—much less the actual path forward—is unclear.

Reflecting this, the major equity benchmarks in developed markets are all indicating consistent selling today. At the time of writing, US markets have culled some of the morning’s losses as some players in Washington are again suggesting that stimulus talks might bear fruit someday. Still, volatility looks like it will be here to stay.

Gold initially got quite a boost when the news of Donald Trump’s positive tests hit the wires during overnight trading, and the spike saw spot prices reach the weekly high of $1915/oz. Once US-based trading stepped to the front however, and especially with open of US stock markets, the flight to safety again bypassed most other options in favor of US Dollar cash. Gold prices have rolled off of the peak this morning, but are again demonstrating some decent support at $1900/oz.

Though its usual market impact has been seriously blunted by the news of the day, sometime next week investors will probably have to reckon with this morning’s US labor market data. While the headline unemployment rate has fallen below 8%, the NFP data set reported far fewer new jobs added in the US economy for the month of September than expected—nearly 200,000 fewer.

LATEST: U.S. job gains slowed in September by more than half from the prior month, missing forecasts and suggesting the economic recovery is downshifting as many Americans and businesses struggle without a Covid-19 vaccine or government aid https://t.co/ThSj6jIMOj

— Bloomberg Economics (@economics) October 2, 2020

Next Up

Next week’s economic calendar is looking pretty sparse, with FOMC discussion minutes on Wednesday leading the line. Ultimately though, the news of the leader of the US government falling ill is going to be the prevailing story surrounding markets for at least the next week, so that will continue to draw a lot of our focus.

Until then traders, I hope you all can away from the terminals and enjoy your weekend safely. I’ll see you all back here on Monday for our usual preview of the trading days ahead.