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 other key correlated assets—and may continue to into the future.
Gold prices have slipped the ledge in Friday’s trading and fallen far enough to wipe out what initially seemed like another positive week for the yellow metal.
So, what kind of week has it been?
The macroeconomic data points that we consider to be of key importance, whether they typically earn that status because they often communicate information critical enough that it has a tangible impact on the US economy and financial markets (at home and globally) as a whole, or on the gold market specifically. We know the usual suspects: monthly job reports, key inflation measurements, etc. FOMC meetings, of course. Depending on what the market is focusing on or trying to solve, the ISM’s PMI surveys on activity in the US manufacturing and services sectors can rise to this level of importance.
Sometimes—in a dynamic that is just as beholden to where the market’s mind is centered, albeit for different reasons—data sets that we normally don’t cover in our preview pieces of focus on with regards to positioning jump the queue, grab investors’ attention, and steer meaningful market moves. This week, with a relatively sparse macro data calendar, such was the case with an alternative to the ISM reporting, S&P Global’s manufacturing and servicing reports.
The week started a little more in line with our expectations for the key drivers. After moderated trading on Monday saw gold holding a line along $2315/oz, disappointing headline numbers in the May Retail Sales report (including a downward revision into negative territory for the prior month’s Retail Sales growth) boosted gold prices higher with the dual tailwinds of general economic uncertainty and the implication that (should this persist) the FOMC could be forced to ease monetary policy sooner and more rapidly than the Fed currently suggests. The yellow metal rode the wave higher to $2330 on Tuesday morning, where prices appeared to stabilize and consolidate, holding within a narrow band for all of Wednesday’s lightly-traded US holiday.
Prior to the release of S&P’s PMI data on Friday morning, the data from similar but more regionally focused surveys provided signals that kept gold supported before eventually driving bids higher to a weekly top beyond $2360 on Thursday night. The regional manufacturing surveys from both the New York and Philadelphia branches of the Fed disappointed against projections, lending steam to the argument that the US economy may be starting to falter more significantly under the strain of elevated interest rates.
From here, gold looked set to bring in its second weekly gain in a row after having slid one week after the next for more than a month. However, with the release of S&P Global’s survey results, which reported upsize beats in both key groupings (with the services sector making the largest improvement above projections), gold spot prices dropped sharply. This appears to have been largely driven by a surge in the strength of the US Dollar as Friday’s PMI numbers not only indicated decent performance in the US economy on its own terms but considerable outperformance as compared to key trading partners in Europe and Japan. This bull-run for the Greenback on Friday as all but done-in the hopes for another green week in gold trading, as spot prices look to have only found support back where they started the week, at $2320/oz. We’ll look for trading activity to pick up a bit more next week with the final trading days of Q2 and with the Federal Reserve’s PCE inflation print capping things off. From this Friday’s vantage point, gold’s next move feels as unpredictable as it has in some time.
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 next week for another market recap.
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