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.

After a strong move higher in the European session, followed by a steep pull-back after running into resistance at $1790/oz, spot prices for gold are moderately lower than Friday’s close but are still starting the US trading week in a strong position near $1770.  A strong rally in US 10-year yields corresponded with gold’s drop in the earlier hours of the morning, suggesting that we may see more bond market volatility like what so often influenced gold markets in the month of March.

The macro data schedule for this week is extra light, with none of the data we typically track coming until Thursday morning. With that in mind, newsflow and market trends will be the key drivers for gold and US Dollar values.

As last week closed, I pointed out that the recent exuberance and optimism for a strong recovery in the US economy was driving the reflation trade close to a possible pivot-point, at which the rush of investors into the equity markets may start to drag on gold’s upward momentum as appetite for risk overwhelms any inclination towards “safer” assets like gold. That relationship remains my point of focus to start this lightly scheduled week, but on Monday morning it looks as if that tipping point will be pushed away for at least a day or two as global DM equity markets are pressing pause on last week’s rally: Key Asian and European stock indexes are, at best, only slightly improved on the day; Shortly after the start of cash trading in the US, the Dow, S&P 500, and NASDAQ are all tipped slightly lower.

Let’s take a look at our (brief) data schedule for the week.

US Economic Data to Watch

Thursday, April 22 at 830am EDT // Initial Jobless Claims

[consensus est.: +625K // prev.: +576K]

With all the strong US economic data released last week, it was almost easy to overlook what was a hugely positive surprise in the number of new jobless claims plummeting below 600,000 for a measured week. The post-pandemic caveat always applies—these numbers, from a historical perspective, are still crushingly high—but as long as the 4-week trend keeps moving lower it’s a sign of the US labor market really starting to heal. Some pullback from such a sharp and unexpected drop is reasonable, so investor optimism shouldn’t take any real hit from a peek above 600K this week. We’ll also want to keep an eye on any revision to last week’s winning number.

Friday, April 23 at 945am EDT // Markit US Manufacturing PMI (Apr)

[consensus est.: 60.5 // prev.: 59.1]

Markit is the primary reporting source for PMI data in the European economies, but for measuring sector activity in the US it usually plays second fiddle to the data from the Institute for Supply Management (ISM.) That said, with little else worth investors’ attention at the end of this week, a strong upside surprise here could easily push the recent market optimism even higher and that’s a move that las week was broadly positive for gold. The very strong measurements of industrial sector expansion we saw Thursday, in the regional surveys from New York and Philly, underline this possibility.

Global Economic Data to Watch

Thursday, April 22 at 645am EDT // ECB Meeting

[No meaningful changes to monetary policy are expected.]

Although there are virtually no expectations for the European Central Bank to adjust policy this month or even hint at the next move, I’ll be keeping an eye on the ECB’s statement and the press conference that follows for any acute impact on the US Dollar. The Greenback’s relative strength or weakness has had particularly strong bearing on how much headroom gold has had to move higher in recent weeks (or, conversely, how much pressure the yellow metal has been under.) If the ECB’s rhetoric significantly pushes the Euro in one way or the other, a proportional reaction in the Dollar may impact gold pricing to end the week. The catch, of course, is that we can’t really say what the ECB’s impact will be: Will the market be more encouraged by the committee pointing to an improving medium-term outlook? Or more concerned that the ECB doesn’t see that improvement as likely in the near term? We’ll see; And it will be a good indicator for more meaningful ECB decisions in the future.

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.