GoldPrice.

Good morning, traders. Welcome to our weekly preview of the macroeconomic data and headlines that will matter most for gold markets this week—the last full week of trading for 2019.

Gold prices are moderately higher to begin the week, despite major equities also making gains after last week’s announcement of an initial trade agreement between the US and China.

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The safe haven buying that’s supportive of the yellow metal was brought on in the overnight session by a run of concerning manufacturing data from the major industrial sectors of Europe as well as the UK, and it’s likely continuing to some degree in the US session due to some tension around another weekly “repo operation” being carried out by the Fed.

In our focus this week will be further confirmation of the US-China trade agreements in writing, as the market still seems to generally be wary of the bottom dropping out at the last minute. We’ll also keep an eye on impeachment proceedings, which have yet to really impact financial markets but always has the potential to, and any pronouncements about Brexit in January from the newly (re)elected Conservative government in the UK.

For now, let’s take a look at the major data points this week.

US Economic Data to Watch

Monday, December 16 at 8:30am ET // Empire Sate Manufacturing Index (Dec)

[consensus expectation: +4.0 // previous: +2.9]

[actual: +3.50]

This morning we saw the Empire State Index print slightly below expectation, but close enough to generate little in the way of market reaction. Looking at the overall trend, there have been fewer downside misses in the data lately, but the actual number remains indicative of subdued momentum in the industrial sector. It’s an issue that the Fed acknowledged last week, saying their outlook assumes (hopes) that consumer spending in the service sector will balance-out growth pressures.

Even in that scenario, there’s presumably a point where the manufacturing sector drag is so great that it pulls everything back with it; to keep an eye out for that, we’ll continue monitoring metrics like this and the Philly Fed Index later this week.

Tuesday, December 17 at 8:30am ET // Housing Starts (Nov)

[consensus exp.: +2.0% MoM // prev.: +3.8%]

Supportive of the Fed’s near- to medium-term outlook, the housing market seems to be humming along even if it’s not running very hot. For the time being, I expect housing to be a data category where any upside surprises are unlikely to move the needle for gold or Dollar prices, but unexpected slowing could spook some investors into risk-off positioning (i.e., gold buying.)

Tuesday, December 17 at 9:15am ET // Industrial Productions (Nov)

[consensus exp.: +0.8% MoM // prev.: -0.8%]

November’s IP data should account for the end of the General Motors strike, so expectations for a slight uptick from the prior month seems appropriate. It’s still a barely positive number in a trend that has been sliding down all year. A stronger rise (let’s say: over 1%) could create some downside pressure for gold if the yellow metal is sitting at a vulnerable price level.

Thursday, December 19 at 8:30am ET // Philadelphia Fed Manufacturing Index (Dec)

[consensus exp.: +8.0 // previous: +10.4]

Philly Fed Manufacturing has been a stronger number than New York’s data for much of this year. For that reason, I expect this month’s data to be mostly inert for major assets. As with the whole of industrial data, a real miss to the downside will probably boost short-term gold buying.

Thursday, December 19 at 8:30am ET // Initial Jobless Claims

[consensus exp.: +225k // previous: +252k]

Lost in the Fed and trade noise last week was another unexpected uptick in jobless claims. It’s still not worth getting concerned about, for now, but a sustained run at or above 250k each week would start to draw some negative attention.

Thursday, December 19 at 10am ET // Existing Home Sales (Nov)

[consensus exp.: -0.4% MoM // previous: +1.9%]

Friday, December 20 at 8:30am ET // Personal Spending & Income (Nov)

[(spending) consensus exp.: +0.4% MoM // previous: +0.3%]

[(income) consensus exp.: +0.3% MoM // previous: +0.0%]

After last week’s Retail Sales numbers were a disappointment, it seems like there’s some room for Personal Spending to pull-back a bit for the same month. As we’ve touched on multiple times, the Fed really seems to be counting on the performance and health of the US consumer to justify the current pause on interest rates, so be prepared for a pop in gold (and other non-Dollar safe havens) should this data get ugly.

Friday, December 20 at 8:30am ET // PCE Inflation Index (Nov)

[(headline PCE) consensus exp.: +1.4% YoY // previous: +1.31%]

[(core PCE) consensus exp.: +1.5% YoY // previous: +1.59%]

Having seen CPI inflation, import data, and PPI numbers for the month of November reported generally in-line with the expectations of analysts as well as the FOMC itself, we look to see a similar performance from the Fed’s official marker for inflation as well. I think everybody has a healthy dose of Fed Fatigue after the second half of this year, so I wouldn’t expect any sustained reaction in gold (or other key asset) prices this time around, absent a sudden (and very unlikely) drop in the annualized inflation rate.

FedSpeak this Week

Before the non-essential machinery of the financial markets begins to wind down for the holidays, we have a few days to squeeze in some commentary from Fed officials to help us confirm (or otherwise) our near- to medium-term views following last week’s FOMC meeting. For now, it seems like the Fed’s pause on interest rates is more or less nailed on, so markets likely won’t be scrutinizing anyone’s comments too closely. Still, it’s worth at least being aware of the following mid-week appearances:

Tuesday, December 17: Dallas Fed President Robert Kaplan (FOMC voter) (8am ET); Boston Fed President Eric Rosengren (non-voter) (12:30pm)

Wednesday, December 18: Federal Reserve Governor Lael Brainard (FOMC voter) (5:15am ET); Chicago Fed President Charles Evans (non-voter) (12:40pm)

Global Economic Data to Watch

Wednesday, December 18 at 10pm ET // Bank of Japan Interest Rate Decision

[no change to monetary policy expected]

We’re not looking for any further easing from the Bank of Japan until the calendar turns to next year, but with their economy’s direct exposure to Chinese economic conditions it will be interesting to hear any views they have for the near term with an initial trade deal (theoretically) agreed to between their rivals and the US.

Thursday, December 19 at 7am ET // Bank of England Interest Rate Decision

[no change to monetary policy expected]

The odds of any fireworks from the BoE this week are pretty low; but with the election victory won by Boris Johnson’s Conservative party last week, most likely future is for the UK to finally divorce from the European Union on January 31. Analysts and investors will be watching Thursday to see how the BoE is bracing for the break and what (if anything) they’re willing to say about the economic outlook for the first half of 2020 and beyond.

And that, traders, is how our last full trading week of 2019 look on the calendar. I wish you the very best of luck in your markets this week, and I’ll see you all back here on Friday for a recap of the week’s trading.