GoldPrice.

Good morning, traders; welcome back to our Monday look ahead at this week’s macro data that’s most useful to precious metals and currency traders.

I’m coming to you a little bit later than usual today, as markets (including gold’s) were already getting whipsawed enough by 7am EDT to encompass a full day of trading. At the time of writing, while down from nearly 7-year highs in Sunday night’s Asian trading gold prices are still around highwater marks for the year near $1530/oz.

As we suggested could be the case at the end of Friday’s market wrap, there was a flurry of market-moving news that hit the wires over the weekend while markets were not open to be moved. Primarily, another sharp escalation—or at least tweeted threats of escalation—in the US-China trade war. The result was an explosive run higher in the gold markets as soon as business resumed on Sunday evening which briefly broke through major psychological resistance at $1550/oz. While that level didn’t hold, the yellow metal’s spot price floated just below it through initial trading as Asian equity markets were battered by the weekend’s negative headlines.

It looked certain that in the more heavily traded US session we’d see another crack at $1550 and higher, until the start of the European session (minus a London hub on bank holiday,) when, after China had made it known they are openly interested in calming things down from the high-burn of the last few days, Donald Trump claimed that negotiations are “back on” between the world’s two largest economies. European equity markets celebrated the news with a day in the green, and US stocks have been higher so far today as well as the US Dollar. In response, gold prices fell on the news. Initially, it looked as if the yellow metal could end up trading all the way back to a loss for the first trading day of the week, but prices have shown resilience with some support sitting just below the opening price, around $1528/oz.

It’s for this reason that I expect this week might be more constructive for gold than last week was (before, of course, the risk-off rocket higher on Friday.) At the time of writing this still is not investment advice, but the Dollar is improving from a battering on Friday and overnight, as are US equities to some degree. And still, gold prices remain at or slightly above Friday’s gains at the close. Combine this with the fact that I’m still only willing to call the resumptions of US-China trade talks “suggested” rather than confirmed (let’s wait for the US president to get home from the G7 before we feel confident again, the markets as a whole literally got burned by this just last week) and I see at least a little more upside than downside this week for gold.

All that to say, we will of course be keeping an eye on US-China trade developments this week in the headlines, as well as post-Jackson Hole comments from the Federal Reserve members as we move out of summer and towards the September FOMC meeting. For now, let’s take a look at the rest of the economic calendar for the week ahead.

US Economic Data to Watch

Monday, August 26 at 8:30am EDT // Durable Goods Orders (July)

[consensus expectations: +1.0% MoM // previous: +1.9%]

[consensus exp.(ex-transportation): flat MoM // prev.: +1.0%]

Actually, because I wanted some time this morning to see the overnight moves shake themselves out a bit this one has already been released.

US July prelim durable goods orders +2.1% vs +1.2% expected https://t.co/cUvAcdpoDs

— ForexLive (@ForexLive) August 26, 2019

The brass tacks take on the data is that while the headline number beat estimates, the revisions to the prior month’s data nullifies that improvement. The metric net of transportations investments, in fact, came in below expectations for the month. As many analysts are pointing out this morning, there’s no evidence of a marked drawback in US companies investing in large tickets like capex so far, but we haven’t yet seen the data for August which will factor in the recent rise in economic concerns. Gold prices found some upward momentum on the news, but nothing spectacular.

Tuesday, August 27 at 9am EDT // Case-Shiller Home Price Index (June)

[consensus exp.: +0.1% MoM // prev.: +0.1%]

Broad expectations are for the Case-Shiller metrics to remain on a slightly upward trajectory. Housing data in the US has been a mixed bag recently-- neither concerning nor comforting—and the Case-Shiller surveys tend to arrive to fairly muted effect in these environments because they’re so back-dated (remember, this is the June data.) Don’t anticipate much movement in the gold or currency markets on this release, unless it’s a large surprise to the upside (tough for gold prices) or downside (boost for gold prices) of the consensus numbers.

Tuesday, August 27 at 10am EDT // Richmond Fed Manufacturing Index (Aug)

[consensus exp.: -4.0 // prev.: -12.0]

So far in the month of August we’ve seen many of the relevant surveys of the US manufacturing sector point towards improved growth and confidence. This week’s Richmond Fed survey is expected to show some recovery from July’s deep drop, although analysts seem to anticipate a still-contractionary overall grading. It’s also worth noting that the Richmond account has been consistently underperforming the consensus in recent months, so I find it hard to say whether a surprise is more or less likely. I would expect a read anywhere between the consensus and 0.0 to be a non-event for gold and Dollar markets, while even one point below expectations will probably drive some measure of risk-off gold buying; on the other end, a positive headline number likely drives the Greenback against gold.

Wednesday, August 28 at 5:30pm EDT // San Francisco Fed President Mary Daly speaks

While not an active voter in this year’s rotation within the FOMC, SF Fed President Daly drove some degree of movement in Dollar and gold markets last week with her comments both about the necessity of the July interest rate cut and her outlook for the coming months. Particularly given that she’s scheduled to speak about inflation targeting I think her comments will watched by many metals and currency traders this week for clues about the Fed’s September issue.

Thursday, August 29 at 8:30am EDT // Initial Jobless Claims

[consensus exp.: +215k // prev.: +209k]

Friday, August 30 at 8:30am EDT // Personal Income (July)

[consensus exp.: +0.3% MoM // prev.: +0.4%]

Friday, August 30 at 8:30am EDT // Personal Spending (July)

[consensus exp.: +0.5% MoM // prev.: +0.3%]

The importance of household/personal income and spending to the health and growth of the US economy is obvious: steady increases in the former means (generally) happier consumers, while steady increases in the later indicate that consumers are still feeding the economic expansion. With both metrics, but particularly spending looking sluggish in recent months, some are starting to raise concerns about just how worrying a signal a real decline in spending would be. Still, it doesn’t feel like time to panic just yet. A weaker than expected read on these two data points for July, however, would certainly be the reasoning Fed doves (and the markets, and the US president) are looking for to lock in another interest rate cut (or two) before the year is out.

I think the shadow of August will hang large over this edition of the data. The market turmoil that we’ve seen spook investors all month seems likely to show in the next round of spending data in particular. This could mean that the gold-positive/Dollar-negative impulse of a poor showing in the July number will be amplified by concerns of what’s to come while any improvement in the data will be dampened by forward looking expectations of the damage done in August.

Friday, August 30 at 8:30am EDT // PCE Price Index (July)

[consensus exp. (core): +1.6% YoY // prev.: +1.60%]

[consensus exp.: +1.4% YoY // prev.: +1.35%]

Personal Consumption remains the Fed’s generally preferred measurement of inflation in the US economy, so it remains at the top of the list of indicators that the market is currently tracking to anticipate the Fed’s rate path at least through the end of the year. The consistent, steady pace that July’s data is expected to report doesn’t provide much ammo for either side of the argument: while it remains below even a “symmetrical” view of the Fed’s 2% target for inflation, it also hasn’t slowed much since the spring when the Fed was still willing to “remain patient.”

While an as-expected release may not move metals markets a great deal, the easy logic is that any miss to the downside that argues for deeper monetary easing will be tailwind for gold prices in the near term; while a beat to the upside that supports another Fed “pause” will likely dampen gold’s momentum.

Friday, August 30 at 9:45am EDT // Chicago PMI (Aug)

[consensus exp.: 47.9 // prev.: 44.4]

As with Tuesday’s Richmond Fed look at economic/industry health, the Chicago PMI is expected to make a mild recover from an ugly prior month but still remain in the contractionary range. It also has the same implications for golf price movement, although likely in a more toned-down manor as many traders and investors will be looking to cash-out for the week by the time the data is released.

Global Economic Data to Watch

Friday, August 30 at 5am EDT // Euro Zone Inflation (Aug)

[consensus exp.: +1.0% YoY // prev.: +1.0%]

While stateside we’re tracking inflation because there still is an argument to be had about whether or not the Fed will, or should, cut rates again in September, in Europe it’s already been decided that the monetary easing (and stimulus!) is coming—it’s only a question of how much. With both hard and soft data down across the board—even in Germany, the common currency’s engine room—August’s inflation data is expected to concern ECB members even further. At lease in the immediate- and short-term, I expect some gold weakness on this kind of data as the likely EUR/USD headwind ought to produce an inversely proportional boost to the Greenback.

And that’s how the week’s macroeconomic calendar looks ahead, traders. I wish you the best of luck in the metals and currency markets over these next five trading days, and I’ll see you all back here on Friday for a recap of the week.