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 starting out the US trading week slightly lower than the Friday afternoon close. Despite a brief peak above $1800/oz during in the morning hours of the European session, the yellow metal is under pressure once again from the continued rally in sovereign debt, which has driven the US 10-year note’s yield north of 1.8% (at the time of writing.)

Gold’s ability to hold support near $1790/oz will be a useful test to begin the week; There’s also the possibility that the start of cash trading in the US markets may see investors stepping into bonds and pulling back on this morning’s rising yields.

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

US Economic Data to Watch

Wednesday, January 12 at 830am EST // Consumer Price Index (Dec)

[(core CPI) consensus est.: +5.4% YoY // prev.: +4.9%]

[(headline CPI) consensus est.: +7.0% YoY // prev.: +6.8%]

If we assume that December’s CPI numbers will print generally in-line with expectations—and there’s little reason not to, looking at the recent record—then the work of trading and hedging around the inflation data will be about managing the market reaction to the year-over-year numbers remaining high. The monthly pace of inflation in December is projected to be more subdued than in 2021, but the 12-month numbers for both the less-volatile “core CPI” and the comprehensive number (“headline CPI”) will remain near the highest levels post-Financial Crisis; These will be the numbers that pundits will latch on to and large numbers of investors will react to first. The reaction specific to gold remains tough to predict in this case. On one hand, the data supports the impression that the Fed will be move fast (and faster) in tightening monetary policy and raising interest rates; The reaction function for which would be expected to put pressure on non-yielding assets like gold. On the other hand, headlines about still-hot inflation (current or expected) are more often a boon for gold prices. Going on the recent past, an as-expected CPI this week seems somewhat more likely to support gold buying than to resist it; but it may take some time for the market to work that out in the immediate aftermath.

Thursday, January 13 at 830am EST // Initial Jobless Claims

[consensus est.: +200K // prev.: +207K]

The number of new unemployment claims in the US rebounded to slightly above 200,000 last week and lifted the four-week average over that mark as well; but, as long as the trendlines remain near to 200K they will continue to support the narrative of a recovering and tightening labor market, encouraging the Fed to continue on its more hawkish path. These data points, then, should be a negative input for gold prices, but investors don’t seem to be reacting strongly to Jobless Claims data alone as of late. 

Friday, January 14 at 830am EST // Retail Sales (Dec)

[consensus est.: -0.1% MoM // prev.: +0.3%]

Retail sales growth is expected to look a little flat (to possibly even reflect a pullback) month-over-month. This may lead to some pearl-clutching—after all, this accounts for the busy holiday shopping season—but analysts’ assessments suggest this is a result of very strong performances in the retail sector through most of 2021 (including the month prior.) Still, even though it comes on a Friday morning, we could see a more moderate version of the issue we discussed around Wednesday’s CPI: investors in safe-havens like gold reaction more to the headline coverage than to the data. Gold could be expected to see some buying support in that case. Also be prepared that a positive surprise in the data may put pressure on gold prices against a rallying US Dollar.

FedSpeak this Week

There’s well-rounded run of appearances (front-loaded to Tuesday) from key Fed officials this week, from which analysts and investors will be looking for signals regarding the readiness of the FOMC to move quickly from the end of the taper (targeted in March) to the first in a cycle of rate hikes. A great deal of the week’s Fed-focus, however, will be on the confirmation hearings for Jerome Powell’s re-appointment as Fed Chair, and Fed Governor Lael Brainard’s appointment to the position of Vice Chair. These hearings will involve questioning from the Senate Banking Committee and are scheduled for Tuesday and Thursday morning, respectively.

Tuesday: Cleveland Fed President Loretta Mester (FOMC voter) (910am EST); Kansas City Fed President Esther George (FOMC voter) (930am); Fed Chair Powell’s confirmation hearing (10am); St. Louis Fed President James Bullard (FOMC voter) (4pm)

Wednesday: Minneapolis Fed President Neel Kashkari (non-voter) (1pm)

Thursday: Fed Governor Brainard’s confirmation hearing (10am); Chicago Fed President Charles Evans (non-voter) (1pm)

Friday: New York Fed President John Williams (FOMC voter) (11am)

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.