Gold Price Review: April 22-26, Weekly Recap

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 given back some of their record gains this week but remain elevated by any historical standard.

So, What Kind of a Week Has it Been?

Last week, we made the case for the three main drivers of activity and trends in the gold market under the current macroeconomic and geopolitical environment: heatedly escalating geopolitical tensions, traders and investors positioning around their concerns that the FOMC will wait too long to cut interest rates, and the progressive flow of macro reporting that helps the market project when the apparently data-dependent FOMC might begin to cut (regardless of whether or not it will be “soon enough.”)

This week, right off the bat, we saw just how powerfully one of those drivers—the geopolitical tension and outright violence in the Middle East—can impress itself against the yellow metal’s spot-price chart.

Monday’s trading opened with a dramatic cooling of wrought positioning between Iran and Israel, at least in terms of public rhetoric. Risk appetite was revived in some parts of the market, with a rally in global stock markets and other “riskier” asset classes while gold spot prices rolled down and down through the US session, parking just above $2330/oz. In what may turn out to be an important show of support for the precious metal, the next European market session (very early morning hours in the US) brought the steepest drop of the week for gold, which brought prices down to challenge support at $2300 just after New York cash trading began. Here, gold proved to still have interested parties willing to consider these previously unseen heights as “cheap”; however, by the close of US trading on Tuesday, prices had already returned to $2320 (or just above.) Gold would hold near this level for much of the week in light of shallow data flow and the pre-FOMC blackout period, keeping a lid on commentary from key central bankers.

We didn’t see another key data point until Thursday morning, which brought us the first tabulation of overall growth in the US economy for Q1 of 2024 in the form of GDP. This turned out to be the bombshell of the week (relatively speaking, as the Commerce Department’s number came in significantly below expectations. The volatility of gold’s drop at the start of the week seemed to take the teeth out of the immediate market reaction to the data, as gold spot only moved a few dollars higher. The delayed response could also come down to the market, en masse, working through how to process the news through the lens of the FOMC’s next moves. While it presents a compelling argument for the Fed to more quickly relieve pressure on the economy (which would be a bearish signal for gold, at present)? Or does it, more importantly, signal that they have already waited too long (likely a bullish case for gold as a safety play)?

For now, the fear of the latter seems to have a slight edge in investors’ minds, as we’ve seen gold’s chart steadily climbing higher since midday on Thursday in a rally that drove spot price as high as $2350/oz on Friday morning.

As the final US trading session of the week has progressed, this rally has been moderated somewhat to a mark of $2340, in part due to the PCE Price Index showing signs of modestly higher than expected inflation, which has weighed on gold valuations. This leaves gold in a position to consolidate what is still an eye-wateringly strong price position, historically speaking, ahead of what will be one of the most definitive weeks for gold’s trajectory in Q2: Wednesday is Fed Day, followed by a new update on the health of the US labor market by virtue of Friday’s April Jobs Report.

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.