Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at the last five trading days with a focus on the market news, economic data, and headlines that have had the most impact on gold prices and other key correlated assets—and may continue to do so in the future.
Here’s what you need to know:
Gold rallied from $3,375 to $3,450 this week, fueled by dovish data and Fed expectations.
Friday’s PCE Index came in neutral, helping preserve the narrative for a potential rate cut.
Thursday’s better-than-expected GDP revision (+3.3% QoQ) helped boost gold buying.
With gold at new highs, next week’s Jobs Report could be the next catalyst—or headwind.
A confluence of mid-tier economic data emerged this week, amounting to one signal: the current moment is not “the wrong time” for the Fed to resume lowering interest rates. Which, for most of the market, seems just as good as saying “right now is the right time.” This is certainly borne out in the gold market, which marked new highs in spot price this week.
Coinciding with gold’s steepest climbs this week, which saw prices rally from $3,375/oz to roughly $3,450, most of the relevant data printed on the back-end of the week.
Most attention (ours included) leaned towards Friday’s PCE Price Index reporting, which includes, among other points, the Federal Reserve’s preferred metric for overall inflation in the US. Here, as expected, inflation pressures for July read as moderate but not alarming—well within “normal” range to some extent.
And while a far cry from the slowdown that would say to the FOMC, “job done,” and force a September cut, in the wake of Jerome Powell’s Jackson Hole address last week, opening the door wide for a cut next month, investors and traders were just looking for any PCE result that didn’t alter the narrative.
The inflation data, not positive but comfortably neutral, has spurred more aggressive buying in gold to close out August. But the yellow metal’s move higher, somewhat surprisingly, kicked off on Thursday, thanks in part to a better-than-expected revision on the second tabulation of Q2 GDP growth in the US (adjusting to +3.3% QoQ).
This, in fact, more directly than the PCE data, also makes a strong case for the FOMC to lower rates in just a few weeks and has similarly encouraged flows into gold.
Looking ahead to next week, with gold reaching new highs, the first question has to be what kind of headroom, if any, remains for the precious metal to climb higher absent a market-breaking, exogenous shock.
