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 having another green start to the week, as prices have been rising in the early US trading hours following relatively flat sessions in Asia and Europe (for gold; equity markets are having a rougher go.)

Gold prices look set, alongside other major commodities, to have strong buying support this week as a result of the continued geopolitical tensions pulsing through developed markets while Russia and the NATO powers remain at an uneasy standoff around the border of Ukraine.

Federal Reserve headlines and decision-making is also a factor for gold prices this week, as we have a new slate of public remarks from some key FOMC officials in the wake of last week’s CPI numbers, as well as the release of the discussion notes for the January meeting.

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

US Economic Data to Watch

Wednesday, February 16 at 830am EST // Retail Sales (Jan)

[consensus est.: +2.0% MoM // prev.: -1.9%]

December’s data on Retail Sales marked a contraction rather than growth, but this was mostly taken in-stride by economists and investors as the result of some seasonal wonkiness with so much holiday shopping being done in the months prior, and a little bit of drag from the Omicron surge. Those same economists and investors, then, will be looking for return to positive numbers in the January report as confirmation that last month was not anything to worry about. (Recent reports on credit card use over the last month suggest this should be case, as even hot inflation hasn’t really kept the average consumer from spending, it seems.) Since there isn’t usually a direct line from Retail Sales to Fed reactions, we expect a more traditional function for gold here: Better than expected numbers probably boost the US Dollar Index and present some resistance for gold as investors’ risk appetite ticks higher.

Wednesday, February 16 at 2pm EST // FOMC Discussion Minutes

In parsing the meeting minutes and discussion notes from the FOMC’s January meeting—in which the Federal Reserve signaled that it will soon be “appropriate” to start hiking interest rates (which the market now almost unanimously takes to mean the next meeting, in March)—Fed watchers will be keen to get any sense of how willing or sensitive the central bank might be to interpret signals from inflation data or the labor market as a need to get creative and break out of the “traditional” pattern for raising rates (+0.25% hikes, announced every other meeting at most.) More and more research desks are setting expectations for “unconventional” action, after last week’s CPI data. Between the Fed’s two biggest pressure points, interesting notes on discussion around inflation are more likely to be more relevant in the January minutes, while the immediate outlook on labor market recovery might be stale (having come before January’s surprisingly strong Jobs Report.)

Just how the gold market might react to (investors’ interpretation of) the FOMC minutes this month is harder than usual to anticipate. As we saw last week, and still see playing out on Monday morning, positive signals for gold price such as elevated inflation expectations appear to be out-stripping the headwinds we would expect to see as US Treasury yields continue to climb. It’s possible that, for now, the market is simultaneously pricing in expectations that the Fed may find a way to tighten monetary policy faster, while also doubting the speed with which those efforts will be able to tamp down on inflation in the near-term. As has become the case more and more with Fed headlines, we may not be able to choose direction expectations for gold prices but it’s reasonable and right to expect volatility around this release.       

FedSpeak this Week

Commentary from Fed officials is going to be closely watched this week, even before and after the release of discussion minutes for the January meeting, on Wednesday afternoon. Following the CPI numbers released last week that show inflation still riding at eye-watering numbers in the US, Thursday and Friday’s trading sessions were greatly impacted by speculation on whether or not the Fed my find a way to bring the descriptor “unconventional” to bear on monetary tightening; Either by hiking more often, or in larger increments than 0.25% for the first time in 20 years. FedSpeak became market-relevant last week, as the St. Louis Fed’s James Bullard called for an aggressive run of hiking to happen immediately; followed by a quick round of appearance from other FOMC officials reiterating a calmer (and likely more market-friendly) approach. This is the same kind of push/pull we’ll be looking out for this week.

Monday: St. Louis Fed President James Bullard (FOMC voter) (830am EST)

Wednesday: Minneapolis Fed President Neel Kashkari (non-voter) (11am)

Thursday: St. Louis President Bullard (11am); Cleveland Fed President Loretta Mester (FOMC voter) (5pm)

Friday: Fed Governor Christopher Waller (FOMC voter) & Chicago Fed President Charles Evans (non-voter) (1045am); 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.