GoldPrice.

Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at these last five trading days with a focus on the market news, economic data and headlines that had the most impact on gold prices—and may continue to into the future—as well as the charts for silver, the US Dollar and other key correlated assets.

Gold prices are wrapping up the week, and a volatile Friday, well-off the highs but still at a healthy premium to Sunday night’s opening bids.

So, what kind of week has it been?

As we wind-down the trading session—and the week—for gold it feels as if a whole week of advance and retreat has been crammed into just the last several hours of US markets. The swing(s) actually initiated overnight, during the first hours of London-based trading, with a sliding US Dollar Index and 10-year yield reeling back from having reached the highest rate since the early summer. Gold, humming with the nervous energy of investors growing more concerned about inflation, took advantage of the extra headroom and began rising higher.

The key pre-market trading hours in New York turned the heat up on these moves. The Greenback continued to weaken, the US Treasury 10-year note’s prices spiked as yields fell below 1.65%, and gold spot prices rocketed to-and-through $1800/oz. Bids for the yellow metal hadn’t set a marker above that major level since the middle of September.

Markets carried on in this way through the open of US markets for cash trading. Gold prices put in a top at $1812/oz and it appeared as if the chart would consolidate through mid-morning at or around the new highs, before an appearance by Fed Chairman Powell pulled investors’ focus and yanked the gold chart back to earth.

Speaking at a conference for the Bank of International Settlements, Powell affirmed that—despite two consecutive letdowns in Non-Farm Payroll growth, the headline metric for the US labor market recovery—the central bank is “on track” to initiate its taper at the November FOMC meeting in two weeks. As we’ve underlined regularly in recent months, any commentary from key Fed officials that reinforces the FOMC’s plans to taper next month (and, implicitly, to move towards a higher interest rate regime) weighs heavily on gold’s outlook and prices. This time, the pressure was enough to drag spot prices back down to $1785/oz—a move exacerbated by Powell’s comments driving both the US Dollar Index and Treasury yields into a rebound.

Of course, there’s a push-and-pull in play for the yellow metal: while signals of more hawking monetary policy are bearish for gold, in its traditional role as a safe-haven hedge an acknowledgement from the Chair of the Federal Reserve that higher inflation may not abate quickly (which we certainly got today) is a bullish signal, too.

In his comments, Powell was quick to insist that the Fed is accounting for the unexpected supply-side constraints that are perpetuating higher levels of inflation in the US economy and globally, and that the central bank is ensuring that it will be ready and willing to use tools to cool inflation if needed. The Chair’s efforts to calm longer-term inflation worries likely muted any upside for gold as an anti-inflation position.

Gold’s backslide—really, the whole Powell-induced swing in gold’s correlated markets—didn’t last long, however. Since the immediate market reaction, the 10-year Treasury yield has fallen back below the level from which it rallied this morning and gold prices have recovered back to the neighborhood of $1795/oz. Into the afternoon, the yellow metal appears to be consolidating these solid gains and could set a strong base to build on next week. It’s worth pointing out that the Dollar’s post-Powell pop has had slightly more staying power that Treasury yields, and that might put a cap on gold’s upward momentum. For now.

The Fed will be in the forefront of investors minds next week as we draw closer to the first “taper meeting” in nearly three years; But the central bank will not be present on our calendar for the week, as the FOMC participants enter into the pre-meeting quiet period. Instead, we’ll keep tracking the US legislature’s fumbling attempts to cobble together any kind of meaningful infrastructure spending plan at the behest of the Biden administration—not because it looks at all likely that the spend would be big enough to inject consequential (long-term) fiscal stimulus into the US economy, but because it may ruffle the bond markets to which gold prices remain clearly tied.

For now, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I’ll see everyone back here on Monday for our preview of the week ahead.