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.

Gold prices are moderately higher this morning after some choppy overnight trading. From a technical perspective, the yellow metal appears to be benefiting from its ability to hold support at $1900/oz at last week’s close. From the fundamental side, safe haven demand for gold is stronger to begin the week as global equity markets are being roiled by the double body blows of new record infection rates in the US amid apparent disinterest from the White House is curtailing it, and the door effectively slamming shut on any last-minute stimulus for the US economy before December. Overseas markets began the week on the back foot, and US stock markets have just fallen sharply to begin their trading day, with the Dow Jones Industrial average down more than 1%.

Gold prices are benefiting from the market’s flight from risk this morning, although it does seem like upside is currently capped by a corresponding rise in the US Dollar which still dominates as the most preferred safe haven. This week’s economic calendar is a little more pertinent than last, but as we wind through the final week of October and the final full trading week before a monumental US presidential election, headline newsflow is far more likely to impact precious metals pricing over the next five days.

US Economic Data to Watch

Tuesday, October 27 at 8:30am EDT // Durable Goods Orders (Sep)

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

Durable Goods, as a measure of manufacturing activity in the US last month and, to some extent, of overall business activity, is expected by the consensus to remain around the prior month’s level of minimal growth. While the biggest ticket components (like aircraft orders) are expected to make up some ground, the core categories will likely lag, reflecting the overall sluggishness we’ve seen in the US recovery in the fall. There are some teams projecting increases as much as 1.5% for the month, so an upside surprise is not out of the question, but my feeling is that by Tuesday morning the market will finally be forced to accept that no economic stimulus is coming pre-election, and that risk-off mood will overshadow any positive improvements in this data set.

Thursday, October 29 at 8:30am EDT // US GDP (Q3)

[consensus exp.: +31% QoQ // prev.: -31.4%]

Most analysts appear to be expecting the US economy’s initial recovery in Q3 to claw back most, if not all, of massive contraction we saw in Q2 thanks to the spring coronavirus lockdowns across the country. Given the rebound we saw in the monthly economic data, this seems fairly reasonable. While this kind of rebound might in a vacuum be a sign of health and positivity that would unwind whatever safe-haven gains that gold or the US Dollar will have made by Thursday, I suspect that markets will temper any optimistic tones given that it’s becoming increasingly clear that, even if the US does not respond to a newly raging spread of the coronavirus with a return to lockdown, the American economy’s recovery has all but halted and that pain will be felt in Q4’s (lack of) growth.

Thursday, October 29 at 8:30am EDT // Initial Jobless Claims

[consensus exp.: +780k// prev.: +787k]

We’re looking for the slow downward trend in new job losses to continue on this week and help the 4-week average shift lower after what (so far) appears to have been an aberrant spike mid-October. As with Durable Goods data, I think the market’s mood (barring a truly surprising turn in stimulus talks) is going to overshadow any mildly positive economic data and prevent its impact from passing through to gold prices (or the Dollar) in a meaningful way.

Friday, October 30 at 8:30am EDT // PCE Price Index & Personal Income/Spending (Sep)

[(core PCE) consensus exp.: +1.7% YoY // prev.: +1.59%]

[(headline PCE) consensus exp.: 1.5% YoY // prev.: +1.38%]

[(spending) consensus exp.: +1.0% MoM // prev.: +1.0%]

[(income) consensus exp.: +0.3% MoM // prev.: -2.7%]

The Fed’s own metric for consumer price inflation in the US is expected to continue in lock-step with the more often cited CPI measurements for the same month. As with the CPI release a couple weeks ago, the continued reversion to 2% inflation is broadly positive for the US economic outlook. As with pretty much every monthly data set since August, though, the anecdotal evidence and the lack of new support for US consumers and small businesses since the summer is tamping down any positive outlook for the final quarter of 2020. If the US government does manage—post-federal elections at this point—to stop tripping on its own feet long enough to pass an impactful rescue package by the end of 2020, this could be a decent base from which inflation can build in 2021 with something resembling a healthy US economy. Goldman Sachs’ research team recently pointed to this as a strong tailwind for gold and silver prices rising higher over the next 12 months.

Analyst estimates are calling for Personal Spending in September to have continued at the prior month’s pace. Given that August’s household income data showed a steep drop-off after the last of the government’s stimulus rolled-off, I think there’s a lot of room for disappointment in the spending numbers either this month or next; When that happens, risk-aversion is likely to spike.

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.