US Economic Data Crucial for Gold Prices: Focus on Core PCE,...

Aug 28, 2023

Gold prices have stayed relatively high on this Monday morning, partly due to a slight dip in the value of the US dollar. Although Fed Chair Jerome Powell and other officials, including Mester, hinted at the possibility of further monetary policy tightening if needed, the prevailing trend in economic data suggests that interest rates might stay unchanged for a considerable period before any reductions are considered. Money markets, as indicated in the table below, are now anticipating the initial rate cuts to occur around June/July instead of the earlier expectation of May before the Jackson Hole meeting.

The importance of US economic data will heighten further this week, given the array of crucial releases listed in the economic calendar below. These upcoming data points will provide markets with greater insight into the future direction. Forecasts suggest the likelihood of a strong US economy, and should the actual data align with these predictions, it could exert downward pressure on gold prices. Among the data releases, the core PCE and Non-Farm Payroll (NFP) figures will take center stage, much as they have in recent times. The continued strength of the US labor market, without any notable signs of weakness, continues to influence core inflation.

XAUUSD BUY LIMIT 1911 - 1913🕯

✅ TP1: 1917
✅ TP2: 1922

⚠️ SL: 1907

Aug 28, 2023

Note

Gold's performance in September exhibits some inconsistency. Historically, up until approximately a decade ago, September held the title of being the most favorable month for gold. However, the situation has reversed since then, and September has transformed into the least favorable month. This recent shift diminishes the statistical argument supporting gold as a standout performer in September, although it doesn't entirely negate it. When examining the entire period since 1975, the statistical evidence is only marginally significant, reaching the 90% confidence level rather than the customary 95%.

Aug 28, 2023

Note

No matter how convincing the statistical evidence supporting a seasonal pattern may be, it's unwise to wager on its persistence unless a logical theoretical explanation can be established for its existence.

My stance on the absence of such an explanation for stocks had remained steadfast for years. However, a recent study published in the Journal of Financial and Quantitative Analysis has compelled me to reconsider. Titled "Seasonal Asset Allocation: Evidence From Mutual Fund Flows," this study was conducted by a team comprising Mark Kamstra from Canada's York University, Lisa Kramer from the University of Toronto, the late Maurice Levi from the University of British Columbia, and Russ Wermers from the University of Maryland. Their research has uncovered compelling evidence indicating that the root cause of September's underperformance in the stock market can be attributed to Seasonal Affective Disorder (SAD).