Gold started the week in a calm manner, staging a downward correction on Monday after rising more than 3% on Friday. On Tuesday, the data from the US showed that consumer activity remained healthy, with Retail Sales rising by 0.7% on a monthly basis in September. This data failed to trigger a noticeable market reaction, allowing XAU/USD to end the day virtually unchanged.
Next week
The US economic calendar will feature several high-impact data releases next week, starting with the S&P Global Manufacturing and Services PMI surveys on Tuesday. On Thursday, the US Bureau of Economic Analysis (BEA) will release the first estimate of the third quarter Gross Domestic Product (GDP) growth and publish the Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, on Friday.
The market reaction is likely to be straightforward to these data and remain short-lived. A strong Q3 GDP growth could reaffirm the Fed’s view that the US economy remains resilient despite high interest rates and help the USD gather strength. On the other hand, a soft monthly Core PCE inflation, at or below 0.3%, could support the view that the Fed doesn’t need to tighten the policy further this year and weigh on the USD.
Geopolitics are likely to remain as the primary driver of Gold’s action next week. The Israeli defense minister reportedly ordered troops to prepare to see Gaza "from the inside." A ground invasion is likely to trigger another bout of flight to safety and support Gold. A de-escalation of tensions in the Middle East seems very unlikely in the near term, especially with Hezbollah getting more involved in the conflict.
Next week
The US economic calendar will feature several high-impact data releases next week, starting with the S&P Global Manufacturing and Services PMI surveys on Tuesday. On Thursday, the US Bureau of Economic Analysis (BEA) will release the first estimate of the third quarter Gross Domestic Product (GDP) growth and publish the Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, on Friday.
The market reaction is likely to be straightforward to these data and remain short-lived. A strong Q3 GDP growth could reaffirm the Fed’s view that the US economy remains resilient despite high interest rates and help the USD gather strength. On the other hand, a soft monthly Core PCE inflation, at or below 0.3%, could support the view that the Fed doesn’t need to tighten the policy further this year and weigh on the USD.
Geopolitics are likely to remain as the primary driver of Gold’s action next week. The Israeli defense minister reportedly ordered troops to prepare to see Gaza "from the inside." A ground invasion is likely to trigger another bout of flight to safety and support Gold. A de-escalation of tensions in the Middle East seems very unlikely in the near term, especially with Hezbollah getting more involved in the conflict.
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