GoldPrice.

Good morning, traders. Welcome to our preview of the (holiday-shortened) trading week ahead, focusing on the economic data and market news flow that looks to have the biggest potential impact on precious metals markets, as well as markets for the US Dollar and other key correlated assets.

Gold prices are running slightly lower this morning as US traders return from the Labor Day holiday, with spot offered near $1920/oz about an hour before US cash markets are due to open.

Equities performance has been mixed ahead of the New York open, with Asian indices making some gains while Europe’s stock markets are currently lower on mix of concerning Brexit headlines to pair with concerning White House headlines. US equity futures, likewise, appear headed for another down day. Tech stocks again seems to be leading the charge lower.

NASDAQ 100 down nearly 3% https://t.co/kekeVANTfy pic.twitter.com/9OCdTLrgWi

— Joe Weisenthal (@TheStalwart) September 8, 2020

The economic calendar for this week is exceedingly light, with Friday’s consumer inflation data the only top-tier release on the schedule. With the FOMC entering the pre-meeting quiet period, we’re lacking in FedSpeak as well. In terms of headline risk, this week sees the return to “work” of the US congress, so those trading in the Dollar and gold should keep an eye out for headlines around what I suspect will be a persisting stalemate around new crisis-support stimulus. The US federal elections draw nearer as well, so there’s potential for more White House saber-rattling aimed at China.

For now, let’s have a look at our brief calendar for the week.

US Economic Data to Watch

Thursday, September 10 at 8:30am EDT // Initial Jobless Claims

[consensus exp.: +845k // prev.: +881k]

Analysts broadly expect jobless claims to fall slightly farther this week, and print a second consecutive line below 1 million for the first time since the crisis begin in the spring. A big upside shock seems unlikely—but then that’s why it would be called a “shock.” In that event, I’d expect a knee jerk move into risk assets, gold of course included. To the downside, an 800-handle looks well priced into the market. I’m not anticipating much in the way of price-sensitivity for gold on this release.

Thursday, September 10 at 8:30am EDT // Producer Price Index (Aug)

[consensus exp.: +0.2% MoM // prev.: +0.6%]

The market is looking for a reasonable pullback from July’s pop in PPI, with a core driver of the difference being a decline in energy costs (on the monthly basis.)  Any up- or down-signals for gold prices around this release will be tied-up with the weekly jobless claims data, but even in a very quiet data week I wouldn’t expect a lot of Dollar or gold chart moves on the back of PPI in the current environment.

Friday, September 11 at 8:30am EDT // Consumer Price Inflation (CPI) (Aug)

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

[(headline CPI) consensus exp.: +1.2% YoY // prev.: +1.0%]

Core inflation in August likely held course at or just near to July’s clip of 1.6% (YoY,) lifted by components that weakened severely in the spring lock downs—like air travels and hotel bookings—continuing a price recovery. The limiters on inflation’s rise this month are lower fuel costs (even though headline inflation looks to move slightly higher this month) and still-subdued housing costs. The Fed’s shift in its inflation-targeting framework, announced last month at Jackson Hole, should diminish gold’s (and the Dollar’s) immediate sensitivity to what is otherwise a deeply mediocre inflation rate as we can now be certain that even a major upside surprise closer to 2% won’t bring us noticeably closer to FOMC actions. There’s always some downside risk of course, where a disappointing CPI print could extend expectations for near-to-zero interest rates. Frankly, though, that point has already been pushed so far over the horizon that I have a hard time imagining a further market-shift in that direction.

Global Economic Data to Watch

Thursday, September 10 at 5:45am EDT // ECB Interest Rate Decisions & Press Conference

[no major changes to monetary policy expected]

The European Central Bank took some announced considerable policy easing at their June meeting and the jury is still (largely) out on its impact, so observers are fairly confident that we won’t see any more policy moves made this month. There will be updated economic projections of course, and investors and managers will keep look out for any market reaction to the committee’s statement or comments that impacts (probably unintentionally) what has been a rising Euro currency this month. We may see the Dollar pick up some up/down momentum; enough to drive gold briefly as well, but probably not in a sustainable way.

And that’s how our truncated trading week is set up for the next few days, traders. I wish you all the best of luck in your markets this week, and I’ll see everyone back here on Friday for a recap of the markets’ moves and news.