Weekly Market Recap: Gold Declines Over the Week

As Friday wraps up this week’s trading, gold appears to be the odd man out, primarily due to fatigue from a recent rally that briefly pushed the yellow metal to all-time highs. Early Monday saw an impactful sell-off that drove prices below the $2400/oz support line. Although buyers stepped in at $2390, the remainder of Monday's trading session across most asset classes was more subdued than expected, following the weekend's US Presidential race upheaval. This lack of volatility kept spot prices relatively stable.

Gold Market Trends Throughout the Week

Throughout the week, the gold market remained flat, with post-rally fatigue blending into the typical mid-July summer doldrums. Contributing to this stagnation was a sparse macroeconomic calendar and the pre-FOMC blackout period, which silenced key Fed officials. Despite this, the sessions had notable moments. Equity markets struggled with disappointing earnings and concerns over the Fed's rate-cut timing, causing the $2400 level, previously a strong support for gold, to become a tough resistance point.

Impact of Global Economic Events on Gold Prices

On Thursday, gold prices dipped further due to headwinds from China, a key gold-buying economy, following the PBOC's unexpected rate cut. However, an overnight rebound led to Friday morning, where gold spot prices aligned closely with Monday’s closing, only $5-10/oz lower.

For June 2024, the core PCE Price Index, a measure of overall inflation in the US, rose by +0.2%, hotter than expected. This data point could be interpreted as either a modest increase confirming that inflation is tamed or twice as hot as the consensus projection, suggesting the FOMC might hold rates steady until closer to Christmas. Traders in the gold market were uncertain, with the chart reflecting only a slight bump post-report. Given the week's context, the upside PCE surprise might have triggered a steep slide in gold if it had been trading above $2400. Instead, prices held steady through the US market open, leading to the first moderate rally of the week, closing at $2385/oz.

Looking Ahead: Gold Market Outlook

Interpreting the gold market’s future is challenging. Will this week’s fatigue persist through the summer? Or is gold finding some support with a mild Friday rebound, along with other asset classes anticipating the benefits of an expected FOMC rate cut, whether in August or December? Next week's calendar promises more significant events: the July FOMC meeting concludes on Wednesday, followed by the June Jobs Report on Friday.

Enjoy your weekend, traders, and stay safe. Join us next week for another comprehensive market recap.