GoldPrice.

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 made solid gains this week, not so much as a result of steady gains but on the back of two sharp rallies across the first week of July.

So, What Kind of a Week Has it Been?
 

Gold's first trading week of 2024's second-half has felt off-kilter all the way through, thanks to the US' Independence Day holiday falling on Thursday—arguably any other day of the trading week would have been less obstructive—and the resulting lack of market depth at times, as a result. On Friday, in fact, it seems we're seeing the impact of that thin volume in the gold market.

The yellow metal opened July with two listless sessions, across Monday and Tuesday. Some would have attributed this to traders and investors holding their cards ahead of any important labor market dataset on Friday, but we read it as at least as likely (if not more so) that this just came down to the start of the usual summer doldrums across markets and the July 4th holiday further reducing activity across the US. Whatever the mix of inputs and reasoning, gold prices rode a thin, mostly inert band between $2325—2330.

Wednesday brought more data and the action that set gold up for a positive week. On either side of the US market open, we saw the June tally of private payroll jobs-added (courtesy of ADP) come in below expectations, followed by a surprising drop in the ISM's Services-sector activity survey to below the 50.0 breakeven and into a reading of contraction. Suggesting possible instability in the US labor market and slowing of consumer activity in the US economy, regardless of the fact that these two data points rarely link to serious moves in gold or other major asset classes, these readings served to make investors feel that pressure could again be mounting on the Fed to take a more aggressive path of easing than they've held to; possibly bringing the first rate cut forward on the calendar and/or cutting multiple times in 2024. Preceding these points, we also saw investors cling to some very specific parts of Fed Chair Jerome Powell's public commentary this week, remarking that the US economy is now/again on a "disinflationary path." These individual inputs conflagrated into a sharp early-morning rally for gold spot prices, and the yellow metal climbed to and easily through the $2350 level that has presented heavy resistance for the last month, before flattening out around $2360/oz. From here, with US markets in full swing, gold rolled into the Thursday break, having consolidated the majority of its gains.

Coming out of the 4th, whichever traders and investors showed up for the bell on Friday were bracing for the June Jobs Report as gold held the line from Wednesday. The report itself, the Non-Farm Payrolls number specifically, was a bit of a mixed bag in the most objective interpretation: the headline number of jobs added to the US economy last month once again "surprised" to the upside at 206,000, but prior months' gains were revised lower. Of course, if "the most objective interpretation" were what really guided a collection of individual actors like the gold market, there would be little use for analysis in recaps like this one. Just as investors bit on a specific reference to "disinflation" in a statement from Powell that, in sum, didn't suggest any change from his or the FOMC's current plan, investors on Friday seemed to be drawing red circles around the downward revisions to labor market data—maybe the labor market that the Fed has been leaning on to reason that rate can remain elevated isn't so strong after all?

Reasonable or not, on a typical Friday in a normal week, we might expect this data and the accompanying shift in perspective to amount to a climb of $10-15/oz for gold spot prices. Instead, with thin trading volumes leading to greater volatility as holiday orders and stops get auto-filled, the yellow metal has gained more than $25 per oz. in a climb to within touching distance of $2400.

Gold prices roll through Friday, and looking set to hit the weekend at their highest level since May. With the next primary read on the state of inflation in the US economy due Thursday, next week will surely test these lightly-attended gains; although the precious metals first challenge will be holding its line when more traders and investors return to markets with the Sunday evening/Monday morning open.

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.