GoldPrice.

Good morning, traders. Welcome to our regular preview of the market week ahead, with a particular focus on the economic data and market narratives that could have the biggest impact on gold prices, as well as the US Dollar and other correlated assets.

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Gold prices are challenging a major psychological level of $1700/oz in the spot markets this morning as the major US stock indices follow the rest of the world’s equity markets to start the week on the back foot.

Dow briefly falls more than 490 points, S&P 500 tumbles nearly 2% https://t.co/Ul6DMcY6Ln pic.twitter.com/eCUSTCJpv6

— CNBC Now (@CNBCnow) April 13, 2020

This week’s economic calendar is on the lighter side, so we expect the continuing fight against the Covid-19 pandemic to dominate markets both in the US and abroad. The developing reaction in commodities markets to an agreement on a massive worldwide cut to oil production in particular will draw some attention.

With that in mind, let’s take a look at the week.

US Economic Data to Watch

Wednesday, April 15 at 8:30am EDT // Retail Sales (Mar)

[consensus expectation (HL): -8.0% MoM // previous: -0.5%]

[consensus expectation (core): -2.0% MoM // previous: flat]

As we move through the next couple weeks, the US economy’s macro data isn’t expected to get any better. On Wednesday we’re looking for the effects of the stay-home orders in most major metro areas to gauge retail data for the month. The core number (ex. gas, autos, and building material) will be the less-bad of the reads as the grocery and pharmacy components will have a bigger impact, benefiting from the stockpiling rush from last month. Online-focused retailers are also expected to see in boost. The headline number looks to be a much deeper cut, exacerbated by a drop in demand for gasoline and carnage in the food services component.

The anticipated numbers are undoubtedly bearish for the US Dollar (and so, reflexively supportive of gold) in a vacuum, but at this stage it’s possible that the steep drop in Retail activity is already priced into both assets. We could see much less sensitivity from gold on this release. That said, at least a few major bank analysts are calling for the numbers to be worse than consensus, with Goldman looking for the headline number to fall by more than 12%, so risk is skewed to the downside.

Wednesday, April 15 at 8:30am EDT // NY Empire State Manufacturing Index (Apr)

[consensus exp.: -35.0 // prev.: -21.5]

Last month’s Empire State number was a massive drop below expectations and our first shot over the bow with regards to how the current crisis is impacting American manufacturing. The consensus this time is looking for an even lower mark, but the question is whether economists and observers have re-calibrated correctly this time. Gold and other safe havens have been moderately reactive to bad news from this report in recent months, but since it comes this month at the same time as the Retail Sales data there may be too much noise to see a push on the gold chart.

Wednesday, April 15 at 9:15am EDT // Industrial Production (Mar)

[consensus exp.: -4.2% MoM // prev.: +0.6%]

The economic drag created by the American effort to combat the spread of coronavirus forced a draw down in industrial activity across the board for the later weeks of March, and that’s expected to be reflected here along with a drop in automobile production that was being reported early in the month. I’m pretty confident that this drop in IP is accounted for in current gold and Dollar prices, but I recommend being on the lookout for a downside surprises that could jitter the market.

Thursday, April 16 at 8:30am EDT // Housing Starts (Mar)

[consensus exp.: -18.3% MoM // prev.: -1.5%]

Because the top-tier metrics for the US housing market have for more than a decade been seen as leading indicators for the path of the overall economy, there may be some added emotional reaction to a 20% decline in new builds. Last month’s data set arrived while markets were still grappling with the arrival of the crisis on American shores and was of course a much milder drop, so there could be even greater impact this time, but the 8:30 am time slot on Thursday is pretty crowded this week (see below) so it may be hard to divine which report Is driving markets the most.

Thursday, April 16 at 8:30am EDT // Initial Jobless Claims

[consensus exp.: +5,000k // prev.: +6,606k]

This week’s Initial Jobless Claims number is expected to be in the multiple millions for a third consecutive go. If that has to be the case, then hopefully (for the benefit of price forecasting) will help us determine if last Thursday’s sharp surge in gold prices was driven in any way by these brutal claims numbers, or just entirely motivated by another bazooka blast from the Fed.

Thursday, April 16 at 8:30am EDT // Philadelphia Fed Manufacturing Index (Apr)

[consensus exp.: -30.0 // prev.: -12.7]

The Philly Fed number last month was a record drop in the metric that pushed gold prices higher in a flight from risk. This week, expectations are for a much less severe decline, and an uglier headline number but one that is likely priced into most US Dollar-sensitive assets. The manufacturing data will be competing for focus with jobless claims and housing starts.

FedSpeak this Week

Well, really, in terms of items worth attention it’s to be “FedSpeak this Tuesday,” but FedSpeak it back! This time with a digital flavor as all scheduled appearances will be conducted over some kind of video call or teleconference. There may well be some additional press interviews not locked into the schedule yet, like Vice Chair Clarida’s appearance on Bloomberg early this morning. As we saw from the Vice Chair, I expect much of the language from FOMC members to focus on reassuring the financial community and the general public about the US economy’s ability to recover, and the utility of the Fed’s toolbox.

Tuesday’s lineup, all non-voting members on this rotation but influential still, is as follows:

• 11:05am EDT St. Louis Fed President James Bullard
• 12:30pm EDT Chicago Fed President Charles Evans
• 3pm EDT Atlanta Fed President Raphael Bostic​

Global Economic Data to Watch

No tier-one economic reports from the wider world that I feel merit your attention this week, but the spring meetings for the IMF and World Bank will be taking place this week so it’s worth being on the lookout of reports or outright announcements of increased stimulus or crisis response measures from either entity or perhaps individual sovereign governments/central banks.

And that’s how our week looks ahead of us. As always, I wish you the very best of luck in your markets over these next trading days and I’ll see you back here on Friday for our weekly market wrap.