Weekly Market Wrap
Happy Friday, traders. It’s time to look back at the previous week in the market, taking a closer look at the events, economic data, and headlines that have influenced gold prices and other related assets.
Key Takeaways:
- This week, gold prices dropped over 2%, breaking an eight-week winning streak due to profit-taking.
- Gold briefly surged toward $4,100/oz as ETF outflows and less intense trade war news impeded buying interest.
- A softer-than-expected CPI report on Friday boosted hopes for more rate cuts from the Fed, stabilizing gold prices above $4,100.
- With the ongoing government shutdown, traders are keenly observing Powell’s remarks for guidance, particularly looking forward to next week’s FOMC decision.
How was your week?
Gold saw a significant drop this week, likely reflecting a decrease in speculative buying as investors opted to secure profits near the metal’s all-time highs. Yet, the fundamental reasons for investing in gold still hold firm. Even with a weekly decrease of over 2%—the first decline in roughly two months—the market shows strong support and reliable buyers above $4,000/oz.
Quiet Fed Period and Trade War Easing
The same themes continue to shape attitudes towards gold valuations, but updates have become scarce as FOMC members enter a “quiet period” before next week’s meeting. Additionally, reports related to U.S. bilateral trade wars have remained quiet, with a generally dovish tone in the limited announcements, particularly concerning recent temporary tariffs on Chinese imports.
This week, anxieties over a worsening trade war and uncertainties surrounding the Fed’s next moves have eased. Gold prices began to decline on Tuesday as traders looked to secure profits, lacking new upward momentum. By Wednesday afternoon, prices had dropped over $200 to $4,100 an ounce from a Monday high of $4,375, largely driven by substantial ETF outflows.
Friday’s Inflation Data Sparks Rebound
Heading into Friday’s U.S. trading session, gold appeared vulnerable, with concerns about further profit-taking potentially pushing prices closer to the $4,000 support level. However, the release of the delayed September CPI report shifted the outlook. Inflation did increase month-on-month but came in lower than expected (+3.0% against +3.1% anticipated). This slightly softer data has raised optimism about potential interest rate cuts by the Federal Reserve next week.
U.S. stocks climbed in response to the news, while gold, which had dipped to $4,050 overnight, saw a notable rebound following the CPI announcement. By Friday afternoon, gold prices seemed on track to finish the week near $4,125 per ounce.
Looking Ahead: Fed Focus
We anticipate the data gap will persist into next week, with little indication that the U.S. government shutdown will resolve soon. This opens the door to increased volatility on Wednesday when the FOMC reveals its interest rate decisions, followed by Chairman Powell’s Q&A session. Traders will be closely watching for insights into the central bank’s views on the shutdown’s economic impact and future monetary policy.
In the meantime, we hope you all get a chance to enjoy the weekend safely. I’ll be back next week with another market recap.
