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 other key correlated assets.

Gold prices are ticking slightly higher than last night’s opening bids on Monday morning, after the US market open saw a chunk of the yellow metal’s overnight gains stripped away, possibly in response to a moderate bounce in US Treasury yields.

The starting moves of the week—both gold’s overnight rise and the agitation in US (and global) bond markets that pushed back against that rally—may have been kicked off by Russia’s intentional defaulting on some debt instruments. This seems to have been largely about proving a point and not true insolvency, and so might get swept under the rug; but if this story hangs around farther into the week there could be repercussions for the Dollar and/or a tailwind for gold.

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

US Economic Data to Watch

Thursday, June 30 at 830am EDT // PCE Price Index (May)

[(core PCE) consensus est.: +4.8% YoY // prev.: +4.91%]

[(headline PCE) consensus est.: +6.4% YoY // prev.: +6.27%]

We’re placing a marker down this week on the Thursday’s PCE release (“the Fed’s preferred measure of inflation”) not in anticipation of a key data update, but mostly as a signal to look out for volatility in the marketplace around gold, the Dollar, and/or US Treasuries. Aside from the clear signals last week from Powell and others that the FOMC policy path is essentially locked-in for the summer (see below for more on that,) a trailing PCE report is never likely to spring a surprise on the market that the earlier CPI data didn’t deliver. This reality, though, has never stopped investors and traders from (over)reacting to the release of similar number from the PCE (which we expect again this week) or the financial media’s coverage of what they know is not new information. Be on the lookout for volatility around gold on Thursday morning: headlines about high inflation might goose gold prices higher, as is always possible (but not promised while the US Dollar remains eye-wateringly high.)

Friday, July 1 at 10am EDT // ISM Mfg Index (June)

[consensus est.: 54.7 // prev.: 56.1]

Inflation worries have been drawing the most headlines week-to-week lately because inflation data is less variable and easier to highlight in a headline; but investors’ fears about the Fed’s attempt to slow down US economic growth over-shooting into a nose dive and recession are still very present and relevant to a safe-haven asset like gold. One of the regular data points that could throw up big warnings about the US cooling down too much is the ISM report on the health and expansion of the US manufacturing sector. Expectations this week are for another moderate step down in the headline number, which may or may not already be “priced in” to gold; but more negative data reports tied to economic growth (as opposed to inflation-focused data) present more of an opportunity for gold to perform well in response to disappointing data: concerns about growth do not imply a higher likelihood of tighter policy from the Fed, and as such may not automatically drive the Dollar higher.

FedSpeak this Week

Federal Reserve Chairman Jerome Powell and Cleveland Fed President Loretta Mester will both join panel discussions on Wednesday morning as part of the ECB’s annual policy forum. Both currently hold votes on the FOMC. Last week’s run of public comments from FOMC officials, which was headlined by Powell’s semi-annual congressional testimony, didn’t stir a lot of excitement in the gold market (or even the US Dollar market, really,) but did come through as hawkish enough on average to push gold prices lower on the week. In his two days of testimony, Powell went as far as acknowledging how challenging it will be for the Fed to bring about price stability (i.e., lower inflation) without slowing demand in the US economy down so much as to cause a real recession; but the Chair also underlined the FOMC’s current intent to carry on with “continued expeditious progress toward higher rates.” In the minds of many, this all but guarantees +0.75% hikes will continue through the summer and possibly beyond. Given that Powell (and Mester) will be able to address an audience with a much more sophisticated understanding of monetary policy than was on offer last week (make of that what you will,) it’s possible that he may deliver something more nuanced; but it will likely be along similar lines to the week before. That is: probably not bullish news for gold.

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 again soon for our next post.