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 and silver prices are on the march higher again this morning, just after the US stock markets have opened the trading week. Admittedly, it’s hard at this point in the day to fully disentangle gold’s momentum from silver’s and clearly tell which is leading the line; But it does seem more likely that the yellow metal is in the driver’s seat as US trading spins up.

Silver saw another odd gap higher at the global resumption of commodities markets on Sunday evening, in an echo of last week. While the initial pop faded away, the white metal has ridden some volatile trading through the overnight sessions to move through—and, at the time of writing, considerably above-- $27. Gold prices initially rode the silver squeeze higher, and have continued to climb. The growing interest in gold buying is probably driven at least in part by the rise in medium-term inflation expectations that came to the fore at the end of last week and had a prominent place in discussions and analysis over the weekend. While the US Dollar has so far been consolidating around the two-month high made last week, gold is certainly seeing preferential attention over US Treasury debt; The benchmark yield on the US 10-year note briefly peaked at 2% overnight, so we’ll watch to see if yields move back in that direction this week.

The economic data calendar is light this week, but with most economists and analysts currently focused on the potential efficacy of the Biden Administration’s Covid relief package to reach its goals (among them, a return to “full employment,”) and potential consequences (inflation,) what little top-tier data we get will be relevant to ongoing debates.

US Economic Data to Watch

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

[(core) consensus exp.: +1.5% YoY // prev.: +1.6%]

[(headline) consensus exp.: +1.5% YoY // prev.: +1.4%]

The deeply detailed notes from macro analysts on their projections for consumer price inflation as of January can be boiled down to the impression that the volatility of some price components coming out of 2020’s lockdowns and activity restrictions is smoothing out even as parts of the US are reinstating some restrictions this winter. Air travel spending is rebounding, and the too-limited adjustment of “rent forgiveness” has waned; Both serve to support inflation even as some other inputs that had been elevated last fall are tailing off.

I believe, then, that we’ll see the US economy’s rate of inflation settle here around 1.5% (annualized)—baring, of course, another crisis—until the US Congress manages to meet the Fed’s massive line of monetary stimulus with the desperately needed push of fiscal spending. If some kind of unwanted disinflationary or deflationary pressures arrive before fiscal stimulus has time to make an impact and we see CPI starting to fall again, that would be a seriously risk-off signal, but one that would also induce a lot of gold selling in favor of USD positions. Otherwise, I think that medium- to long-term inflation expectations will contribute a consistent (if mild) flow of support to gold as the traditional hedge.

Thursday, February 11 at 830am EST // Initial Jobless Claims

[consensus exp.: +760K // prev.: +779K]

Although it got lost in the market froth and then a real bummer of a monthly Jobs Report, last week’s drop in the number of new unemployment claims was a pleasant surprise. Analysts are hoping to see the number continue to fall this week, or at least to remain under 800K in hopes that the longer-term trend in job losses will finally start to decent from the historical heights that it’s held above for the better part of a year. With a light data schedule this week if there’s not a more acute narrative roiling markets by Thursday we may see higher price sensitivity to Thursday’s labor market data.

FedSpeak this Week

This week’s docket for public appearances by FOMC members is lighter in attendance, but brings in the heavier hitters to be sure. As Congress and the White House continue to negotiate and hammer out the route of passage for the Biden Administrations massive Covid relief plan, I expect Chairman Powell will use at least some parts of his comments on the labor market outlook to continue pushing for the urgent need of such a package to support economic recovery. Bullard and Williams can be expected to carry the partly line as well.

Tuesday:  St. Louis Fed President James Bullard (non-voter) (12pm EST)

Wednesday: Fed Chairman Jerome Powell (FOMC voter) (2pm)

Friday:  New York Fed President John Williams (FOMC voter) (10aam)

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.