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 in the future.
Here’s what you need to know:
Gold prices traded in a wide but steady band after Monday’s breakout, staying above $3600/oz despite key economic catalysts.
Thursday’s CPI report showed inflation holding steady and below 3%, bolstering expectations of a Fed rate cut next week.
A surprising spike in weekly jobless claims added pressure on the Fed to act, hitting a four-year high and shaking markets.
Despite these tailwinds, gold didn’t spike Thursday—raising questions about whether expectations for rate cuts are fully priced in.
In advance of the most consequential FOMC meeting of 2025 ending next week, markets traded this week around a critical update on price inflation in the US economy and, unexpectedly, an attention-grabbing labor market number. Intra-day charts for the gold market for most sessions this week look relatively flat following Monday’s aggressive breakout to new highs, but key takeaways from this week come from observations of why the gold market was less choppy in those situations, as well as how other major asset classes traded around gold at the same time.
Thursday, September 11 at 8:30 am EDT // August CPI Report
Investors and traders were highly anticipating the updated Consumer Price Index numbers to report on consumer price pressures for the month of August. Here, numbers came in broadly in line with expectations on an annualized basis: “core” inflation (ex. fuel and food costs) printed at +3.1% YoY as projected, and the overall inflation number came in at +2.9% YoY—also even with the consensus estimate and, crucially, remaining below 3%.
Core CPI also matched projections for August alone, and while overall inflation for the month printed moderately hotter than expected (+0.4% vs. +0.3% est), the underlying data suggest the pulse of inflation in the US remains generally subdued. Source: BLS
(This has not, of course, prevented different financial media outlets from leaning into the alternative—and not wholly unviable—inference that this number is the thin end of an inflationary wedge.) Taken as a whole, the CPI report does exactly what investors hoped for: it keeps the door wide open for the FOMC to announce the first interest rate cut at next week’s meeting.
Thursday, September 11 at 8:30 am EDT // Weekly Jobless Claims
At the same time on Thursday, the US Department of Labor reported weekly Initial Jobless Claims. For all the focus on the monthly Jobs Report produced by the BLS, markets over the last 24 months have tended to gloss over the weekly jobless claims number, unless it’s a blockbuster. Thursday’s report was.
Where the number of new unemployment claims was expected to remain roughly flat from the previous week, it instead jumped by more than 25,000 entries and reached the highest level in nearly four years. If an inflation report that measured price pressures as remaining consistent was enough to hold the door open for a rate cut next week, this data point may have set a charge on the retaining wall and blown a hole through it. Now, under the (lightly shaded) specter of labor market instability, it’s considerably harder to make a case against the Fed cutting by at least -0.25% in a week’s time.
Why no sharp climb in gold prices on Thursday, then, given how strong a tailwind gold has enjoyed this year, precisely based on expectations for a lower interest rate environment? (Not to mention the historical function of gold as a hedge against the same labor market risk that this week’s Jobless Claims number highlights.)
After all, US stock markets have continued to push toward new all-time highs as investors look forward to Fed Day. As momentum picks up to push American monetary policy toward lower rates in Q4, the yellow metal has traded in a controlled band, albeit a wider-than-usual band of $20/oz.
The dynamic at play may simply be that gold spot prices have “topped out” in this paradigm; that no degree of further confirming a likely cut will add an additional tailwind.
While the inverse is true here, and the projection of gold’s next move has to acknowledge that while prices aren’t breaking out to the upside here, they have also appeared supported well above $3600/oz and above even the inflation-adjusted price of gold at the time of Bretton-Woods.
But this week’s chart does raise some reasons to be wary, too. Investors should ask the questions: Could the eventual announcement of a rate cut next week end up being a disappointment? If the Fed delivers a single cut but does not provide conclusive forward guidance about the next one, will that be a letdown? If it is, how much of gold’s gains over the last quarter were based not only on one cut, but on a clearly communicated plan to continue lowering rates?
This will be an important part of the market’s psychology next week, and it may well lead to higher-than-usual volatility in the sessions leading up to Wednesday.
In the meantime, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I’ll see you back here next week for another market recap.
