Happy Friday, traders. Welcome to our weekly wrap-up of the markets, where we look back at the last five days and focus on the market news, economic data, and headlines that have had a significant impact on the prices of gold and other key related assets – and may continue to do so in the future.
Here’s what you need to know:
-
Gold will end the week near $4,550/oz after failing to hold last week’s consolidation above $4,725 and slipping to a major psychological support level.
-
The main driver this week was hotter-than-expected inflation data, while CPI and PPI readings pushed markets back from expectations of a one-to-two rate cut by the Fed in 2026.
-
The confirmation of Kevin Warsh as the next Chairman of the Federal Reserve boosted hawkish prices, lifting the US Dollar Index and Treasury yields while driving Friday’s sharp decline of nearly $100/oz in gold.
-
Next week’s big calendar is light, but a busy slate of Fed speaker appearances, Warsh-related Q&A, ongoing war in Iran, and volatility in institutional gold flows should keep traders on their toes.
So, What Kind of Week Has It Been?
At the beginning of this trading week, we believed that the major immediate area may be calm, and that although there will be no strong shocks that may cause volatility in gold, the yellow metal may be set to continue to rally above $4,725/oz and possibly rise. That wasn’t the case, as gold prices have been pushed lower for nearly a week: first in a slow but steady slide following a hotter-than-expected inflation reading for both US consumers and producers, then a sharp drop on Friday as markets priced in their first predictions of what the “Warsh Season” of Federal6 policy will mean as a 20-year monetary policy. the end of the week is around $4,550/oz, moderately above a major psychological level.
Hot Inflation Resets Rate-Cut Tape
CPI data released on Tuesday morning showed that US consumer prices, on an annualized basis, were hotter than expected last month, with “core CPI” (excluding food and energy costs) rising +2.8% YoY and a broader measure scaring investors by rising to +3.8%. The high headline inflation number was not too surprising, given the high pressure that the US and Israel’s war against Iran and the closure of the Strait of Hormuz are putting on oil and energy prices. But the monthly core CPI number also rose above consensus estimates.
The next morning, monthly manufacturing inflation in the US economy came in much higher than expected, with overall PPI coming in at +1.4% (vs. +0.5% expected) and even core PPI rising to +1.0% (vs. +0.3% expected). Gold continues to be held in a historically contradictory way: despite being a benchmark investment to deal with inflation, these numbers are depressing the yellow metal’s benchmarks due to the effects of monetary policy, which is the main focus of investors and traders in all asset classes.
After the inflation data reports, investors have backed away from previous positions that implied and expected one to two interest rate cuts from the Fed in 2026, perhaps even in the first half of the year. Several analysts’ desks have leveled their predictions for just one rate cut from the Fed this year if they set rates in two, or none at all if they set rates in one. This shift not only drove gold prices down directly, but also pushed the US Dollar Index higher near Treasury yields, continuing to weigh on the precious metal.
Warsh’s Confirmation Adds a Hawkish Layer
Also on Wednesday, the US Senate confirmed the appointment of Kevin Warsh as the new Chairman of the Federal Reserve, next Friday. Warsh is considered a central bank hawk despite being appointed by administrations that have publicly campaigned for lower rates. This has reinforced the shift in expectations for the timing and size of the FOMC’s next steps and firmly keeps rate hikes on the table.
Interestingly, markets appear to be waiting until the actual day of Warsh’s filing on Friday to express these views through trades and bids, rather than immediately after the confirmation vote. On Friday alone, gold prices slipped to around $100/oz.
Looking Forward
The coming week brings a relatively busy economic schedule, with another busy slate of public appearances from key Fed officials where the “new boss” is expected to be the subject of Q&As and analysis. With the war in Iran expected to continue throughout next week, if not decelerate, we might expect the geopolitical risk premium to support gold buying. But in its third month, it is now painfully clear that investors and markets are normalizing the war and its lasting effects on global stability and trade. Gold and other primary risk-off assets do not appear to be making the same gains as they were a month ago.
Although last week’s quarterly report from major banks highlighted an aggressive increase in central bank purchases of gold reserves in developing countries, even that support appears to have been outweighed by strong outflows from other institutions that are increasingly eliminating physical gold from the fiat-currency liquidity game.
In the meantime, traders, I hope you can get out and safely enjoy your weekend for the next few days. After that, I’ll see you back here next week for another market update.
