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 have tipped higher to start this week’s trading, after the overnight markets saw prices endure some choppy, but ultimately constructive, activity.

The key economic indicator due this week is the updated read on consumer inflation for the month of January. In the sessions leading up to Thursday’s data, and then in the market reaction to it, it will be important to keep an eye on the bond market and how it might impact gold prices (with strong moves in yields typically putting pressure on the yellow metal, or at least capping its upside.) Last week was ugly for bond, with the US 10-year yield rising above 1.9%, and Monday looks to be beginning in the same tone with some of Asia’s benchmark yields continuing to climb. In the early US hours, gold spot prices are so far hanging in with Treasury yields drifting higher, but there may be increased volatility when cash markets open later in the morning.

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

US Economic Data to Watch

Thursday, February 10 at 830am EST // Consumer Price Index (Jan)

[(core CPI) consensus est.: +5.9% YoY // prev.: +5.5%]

[(headline CPI) consensus est.: +7.3% YoY // prev.: +7.0%]

Consumer inflation data this week, in terms of what the numbers actually convey, should be another repeat of the last several months’ messaging: The year-over-year numbers will remain high, possibly even nudge higher, as a result (largely) of time-series effects and other one-off inputs; Meanwhile, the monthly pace of inflation will (assuming an as-expected print) have slowed for another consecutive month. Pundits and financial media coverage will focus on the annualized numbers, because tension and fear drive clicks, and normally this would be the risk point for gold prices as investors’ expectations for a hawkish Fed might increase dramatically, damaging the case for gold positions and creating weakness for the yellow metal that would accelerate as investors strengthen the Dollar.

That said, last Friday’s unexpectedly strong labor market data, and the market’s embrace of gold above $1800/oz after an initial sell-off, suggest that the investors are starting to lock-in their projections for an economy in which the Fed hikes in March, possibly by .50%, and signals the next move—and that gold has a place above $1800 in that environment. That’s not to say there won’t be any volatility for gold around the release of the CPI data; Knee-jerk movements in the US Dollar could spur inverse activity in gold. But there’s reason to think that the yellow metal will be resilient through that kind of turbulence.

Thursday, February 10 at 830am EST // Initial Jobless Claims

[consensus est.: +230K // prev.: +238K]

The pressure will certainly have come off of Initial Claims data, now that January’s NFP number was so strong and previously ugly reads at the end of 2021 have been revised higher. Still, it will be important for economists to see the weekly pace of unemployment claims at least retreat back towards 200,000 after elevating recently. Because this week’s number drops at the same time as important inflation data, it will be near impossible to tell what (if any) impact the number will have on gold prices.

Friday, February 11 at 10am EST // Univ. of Michigan Consumer Sentiment (Feb)

[consensus est.: 67.5 // prev.: 67.2]

We don’t typically feature this Friday data point, as it doesn’t often have major impact on gold prices or even the Dollar in a way that matters for our purposes. But with January having been such a rough ride for equity markets and many investors, and the first few sessions of February at least suggesting that that page might be turning, we think markets might be sensitive to a read on investors’ overall mood and (in theory) their willingness to participate in the economy and markets for the coming weeks. The number is unlikely to be outright “bad,” but a drop that signals consumers remain a little weary or spend-shy is not a good indicator for the economy as we head towards a rate hike, and the reaction could sink the Dollar Index briefly while boosting gold prices at the end of the week. A surprising rise in consumer sentiment (and the headlines that would report it) are most likely to have the opposite effect on the precious metals.

FedSpeak this Week

This week’s calendar for public appearances from FOMC officials has a few notable items, without featuring much from the heavy hitters like Powel or John Williams. After last Friday’s strong January Jobs Report (and accompanying revisions to November and December) eliminated any suggestion that the Fed’s plan for aggressive tightening might be delayed by a slump in the labor market, Fed watchers this week will mostly be trying to gauge at the push-and-pull dynamics between the contents of official FOMC communications which have brought some investors (and several research desks) to believe that the central bank may try to squeeze more than four hikes (one every other meeting) into 2022, and last week’s remarks from individual committee members calling for the path and pace of hikes to be “gradual” and data-dependent.

Wednesday: Fed Governor Michelle Bowman (FOMC voter) (1030am EST); Cleveland Fed President Loretta Mester (FOMC voter) (12pm)

Thursday: Richmond Fed President Thomas Barkin (non-voter) (7pm)

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.