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 moderately lower on Monday morning, which is somewhat lightly traded as markets are open although the US is observing a federal bank holiday. With the US President allegedly out of the woods in terms of his recovery from COVID-19, the market’s focus is once again almost entirely resting on the slim hopes of Congress and the White House throwing the US economy a fiscal lifeline. Given that there doesn’t seem to be any new information, it’s curious then that US stock markets this morning are following the global trend higher. The US Dollar is slightly weaker this morning, alongside silver and gold. The yellow metal however appears to be consolidating near $1920/oz in a supportive start to the week’s trading.

Let’s have a look at the economic calendar ahead.

US Economic Data to Watch

Tuesday, October 13 at 8:30am EDT // Consumer Price Inflation (CPI) (Sep)

[(core CPI) consensus exp.: +1.8% YoY // prev.: +1.7%]

[(headline) consensus exp.: +1.4% YoY // prev.: +1.3%]

We’re looking for September’s CPI inflation numbers to perform more or less the same as we saw the Federal Reserve’s PCE inflation index data for last month: a moderate shift higher on an annualized basis as consumer prices continue a slow but (for now) steady recovery from the impact of spring lockdowns. Also as with the Fed’s data, it’s tough to see a big market reaction to this month’s numbers as we know the FOMC has adjusted their inflation-targeting framework and would be willing to allow the economy to run hot for a bit before enacting any kind of monetary policy tightening that would impact asset prices.

That said, there will always be some degree of gold buying if a monthly CPI report comes in somewhere above expectations due to gold’s most traditional as an investor hedge against inflation. I could also see a rush to gold as a safe haven if there were to be a serious miss the downside here—in a sudden risk-off swing—but it’s very rare that the market is that far off-base with a CPI estimate.

Wednesday, October 14 at 8:30am EDT // Producer Price Inflation (PPI) (Sep)

[consensus exp.: +0.2% MoM // prev.: +0.3%]

Producer prices likely continued their steady trend in the month of September, with rising food prices and slumping energy prices acting as somewhat equal but opposite forces. In a week with so much attention on things outside the data calendar this one is probably not going to be an immediate market-mover but will help us model an outlook for US manufacturing heading into 2021.

Thursday, October 15 at 8:30am EDT // Initial Jobless Claims

[consensus exp.: +820k // prev.: +840k]

Aside from Tuesday’s consumer inflation data, jobless claims present the only data point that I feel could break into the market’s narrative this week. That’s due to the steady hum of disappointment that the labor market’s high-frequency data has been putting out as the pace at which job losses had been tapering off since the spring appears to be slowing to a crawl at a still excruciatingly high 800,000/week. The longer the trend continues, the more pressure I expect it to put on the US’ economic outlook. At the moment, the reach for safety that these concerns generate is playing out as a rush straight into the US Dollar, so for now we would expect to see dour jobless claims data push gold some bit lower while the Greenback rises.

Friday, October 16 at 8:30am EDT // Retail Sales (Sep)

[consensus exp.: +1.0% MoM // prev.: +1.2%]

Analysts are looking for an uptick in restaurant spending and a trend higher in overall credit card usage to continue lifting US retail spending at least at a 1% monthly pace. Personally, I think those projections are asking what little is left of the government’s fiscal aids from the spring to be doing an awful lot of work, and any falter in the pace of retail spending before those benefits roll-off will likely put a big dent in the market’s risk appetite. Whether that would be supportive only of the US Dollar and Treasury debt or else provide a strong tailwind for precious metals prices as well is something we’ll have to get through more of this week to determine.

FedSpeak this Week

The third week post-FOMC meeting typically sees the importance and utility of public Federal Reserve officials’ remarks fall away, as we’ll have heard most of the relevant commentary in the first two weeks; this week’s docket really is no different in that respect. Still, with the White House and Congress still refusing to collaborate on a new stimulus package, I’ll be curious to see if Fed officials ratchet up their rhetoric about the risks to the economy that grow each day that the US consumer goes without a lifeline.

Wednesday: Federal Reserve Vice Chair Richard Clarida (FOMC voter) (9am EDT); Federal Reserve Vice Chair Randal Quarles (FOMC voter) (1030am EDT); Dallas Fed President Robert Kaplan (FOMC voter) (3pm EDT)

Thursday: Fed Vice Chair Quarles (11am EDT); Minneapolis Fed President Neel Kashkari (FOMC voter) (5pm EDT)

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.