GoldPrice.

Good morning, traders; welcome to our market week preview, where we take a look at the economic data, market news, and headlines likely to have the biggest impact on the price of gold this week and beyond, as well as other key correlated assets.

Following the Memorial Day holiday in the US, gold prices are moderately lower from last week’s close, as the re-opening of US markets seems to be pushing Treasury bond yields higher and (possibly) reviving the US Dollar rally.

The key data point for gold (and, indeed, most assets classes) this week is the May Jobs report, due on Friday. We’ll also be keeping an eye out for headline risk and/or momentum today, as US President Joe Biden and Fed Chair Jerome Powell are scheduled to meet to discuss the current situation around still-high levels of consumer inflation in the US. Candidly, any past or sitting US President is always unlikely to offer much to this conversation, and there shouldn’t be any news of real substance that comes from the meeting—but investors will still be sensitive to headline risk from this kind of meeting, and the fact that the topic du jour is inflation means that sensitivity might have an effect

For now, let’s take a look at the rest of the calendar ahead.

US Economic Data to Watch

Wednesday, June 1 at 10 am EDT // ISM Mfg. Index (May)

[consensus est.: 54.5 // prev.: 55.4]

There has continued to be a risk-off reaction in the marketplace following a dip in manufacturing PMI reads in recent months, even though forward guidance offered by the Fed at this point in their path of hiking rates to combat post-pandemic inflation has ensured that the macroeconomic data getting the most of investors’ attention right now are the key reads on inflation and the labor market. Depending on whether the US Dollar remains on the back foot this week, gold spot prices could see a tailwind come in on Wednesday if the ISM number drops for a fifth month out of six.

 Thursday, June 2 at 815am EDT // ADP Employment Report (May)

[consensus est.: +300K // prev.: +247K]

Within the “consensus” this month, there’s a wider spread of estimates for the number of private payroll jobs added in May, with calls both above and below the prior month’s number. This increases the possibility that the number printed is notably higher or lower than expectations, and we know, as gold traders, to be on the lookout for volatility around the release of this data point (independent of whether a better- or worse-than-expected ADP number has any bearing on Friday’s more important Non-Farm Payrolls number.)

Friday, June. 3 at 830aam EDT // May Jobs Report

[(NFP) consensus est.: +325K // prev.: +428K]

[(unemployment) consensus est.: 3.5% // prev.: 3.6%]

The US labor market, in an odd repetition, added 428,000 jobs in both March and April (pending a revision to the April number this week); this was a step down from numbers that had been strong and surging since autumn 2021, but still healthy and indicative of the “robust” labor market that the Fed is relying on the back its tightening of monetary policy this year. Given the emphasis that Jerome Powell & Co. have placed on the need for a strong labor market at present, we could see investors get a risk-off chill from seeing the NFP number drop into a 3-handle (as expected by the consensus,) even though this would still represent an objectively healthy labor market in the US. Whether or not this will benefit gold’s pricing is tough to say this far out without knowing if the US Dollar will have regained some pace over the course of this week. A deeper drop than expected is more likely to be a boost for the yellow metal, however: it would (likely) drive investors towards gold as a safety play while weakening the Greenback by increasing the likelihood that the Fed will slow its policy path in the later months of 2022.

FedSpeak this Week

We have a handful of scheduled appearances from FOMC officials that are worth keeping an eye on this week, the final week before the “quiet period” that precedes the next committee meeting in June. On the back of last week’s FOMC discussion minutes from the May gathering, markets feel fairly confident that a consecutive hike of +0.50% is on its way with the start of the Fed’s balance sheet runoff. With the next move already booked, investors and other Fed watchers will continue looking for clues about what kind of progression in the macro data might compel the FOMC to pull back to a pace of 25 basis points per hike (or to fully pause for a month) in the later months of this year.

Wednesday:  New York Fed President John Williams (FOMC voter) (1130am); St Louis Fed President James Bullard (FOMC voter) (1 pm)

Thursday: New York Fed Exec. VP (and incoming Dallas Fed President) Lorie Logan (non-voter) (noon); Cleveland Fed President Loretta Mester (FOMC voter) (1 pm)

Friday: Fed Vice Chair Lael Brainard (FOMC voter) (1030am)

And that’s how the week lays out ahead of us, traders. As always, I wish you all the very best of luck in your markets in the coming days, and I’ll look forward to seeing you all back here on Friday for our market-week wrap-up.