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 some minimally choppy trading overnight, precious metals prices look solid if moderately lower relative to the opening price of Sunday evening. Gold is weakening slightly just after the open of US stock markets, as equities begin the week on the back foot and 10-year Treasury yields shift a bit higher.

News flow this week will likely continue to be dominated by the White House’s continued pitch to legislators on its massive infrastructure bill, as well as more discussion about how to pay for it. This and a few Treasury debt auctions scheduled for this week may present a test for the recently regained stability in the bond market, which we know is meaningful for gold prices this week as the yellow metal and Treasury yields have maintained their strong inverse correlation, particularly on bigger moves. In the macro data calendar, Tuesday’s inflation read will draw focus, followed by retail sales data on Thursday.

US Economic Data to Watch

Tuesday, April 13 at 830am EDT // CPI Inflation (Mar)

[(core) consensus est.: +1.5% YoY // prev.: +1.3%]

[(headline) consensus est.: +2.5% YoY // prev.: +1.7%]

Analysts and economist expect that the effects of economic reopening around the US, juiced by the American Rescue Plan Act’s direct stimulus payments and assistance to small/medium businesses, will be felt in a big way in March’s measurements of consumer price inflation. The biggest driver, though will, be last month’s higher energy prices: The gains in crude oil in particular should help boost the more volatile “headline inflation” number well above 2%.

I wouldn’t be surprised to see some back-and-forth in the US Treasuries markets around the release of CPI. Although our understanding of the factors that may well produce a headline number at 2.5% or higher fit well into Jerome Powell and the Fed’s description of “transient” spikes in inflation, Q1’s trends make it easy to imagine another burst of selling in benchmarks like the US 10-year on a misguided expectation that the Fed will hike (much) earlier than planned. The resulting surge in yields would be a headwind for gold prices and a boost for the US Dollar; But I expect it wouldn’t last long before the market unwinds the faulty assumptions.

Thursday, April 15 at 830am EDT // Initial Jobless Claims

[consensus est.: +700K // prev.: +744K]

Last month’s Jobs Report counted such a massive surge in new jobs for the US economy that reasonable observers will expect some measure of pullback when we get the data for the current month; But, as we move toward the middle of April, if weekly jobless claims data continues holding above 700,000 analysts and investors may start to worry about deeper retraction that would signal more concerning structural problems in the labor market. As I said last week, initial claims numbers don’t seem to be directly impacting trading or valuations right now, but they remain useful for projecting the monthly data.

Thursday, April 15 at 830am EDT // Retail Sales (Mar)

[consensus est.: +5.5% MoM // prev.: -3.0%]

Retail sales data is expected to show a major recovery in the numbers for March, analysts say, driven by three factors: reopening metro areas, accelerated spending as an effect of direct stimulus payments, and a rebound from the brutal winter weather of February. Alongside, the rise in gas prices will also have pushed the March data higher. As with Tuesday’s consumer inflation report, the bigger-than-usual numbers will be much more a factor of transitory improvement relative to the prior data set, and less a signal that economic growth in the US will sustain at that pace. Still, I expect that equity markets will get a jolt and the initial reaction will encourage more investors into the reflation trade. Gold and silver, like other commodities, may be able to participate in a move higher; But it’s also possible that inflation hawks will weigh in again here, goosing Treasury yields for a short time and resisting any gains for gold.

FedSpeak this Week

The docket for FOMC participants’ public remarks is a little more crowded this week, and one of the reasons that I expect any sharp reaction by inflation hawks driving yields higher in response to Tuesday’s CPI data will be short lived is that most of them (including comments from Chair Powell) will arrive after the data prints. I expect Powell & Co, as they have done several times in the last month, will talk down any unreasonable market reaction. Aside from that, I’ll also be keeping an eye out for FOMC members’ views on the Biden Administrations plans for (more) massive fiscal spend, and the nascent push—led by former Fed Chair Janet Yellen—for an international minimum corporate tax.

Tuesday: Philadelphia Fed President Patrick Harker (non-voter) (12pm EDT)

Wednesday: Fed Chair Jerome Powell (FOMC voter) (12pm); New York Fed President John Williams (FOMC voter) (230pm); Fed Vice Chair Richard Clarida (FOMC voter) (345pm)

Thursday: San Francisco Fed President Mary Daly (FOMC voter) (2pm)

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.