The FOMC decision (US Federal Reserve – Federal Open Market Committee)
As previously mentioned, interest rates for the US Dollar can be influential for gold prices. In turn, banks’ central rate decisions – in particular the FOMC – can also have a major impact on the US Dollar. If the Fed plans to increase interest rates, the alternative cost of holding gold increases, and this could affect prices negatively.
Lower interest rates or lack of increases may be favourable for gold prices. There are eight Fed meetings per year, usually taking place on Wednesday evening.
The Federal Reserve is the largest and most influential central bank by a long way. What happens in the meetings, the press conference, and the minutes are all very significant in terms of what happens to the US Dollar, US Interest Rates, and therefore all other financial assets, especially gold.
The ECB Decision
The Governing Council of the central bank of the Eurozone meets every six weeks.
The BOE Decision
The Monetary Policy Committee (MPC) of the Bank of England meets approximately every six weeks.
The BOJ Decision
The Monetary Policy meeting of the Bank of Japan is held approximately once per month.
The NFP report (Non-Farm Payrolls – US Employment Report)
The Fed is important for gold prices and the NFP reports are important for the Fed. The report, usually released on the first Friday of each month, contains data on employment, unemployment rate, and wage growth in the US. Higher employment and higher wage growth are a sign of economic strength and could encourage the Fed to increase interest rates. So, a good report is not necessarily good news for gold prices. The less followed but still influential ADP jobs report is usually released a few days before and is also worth following.
The WGC Quarterly Report
Demand and supply trends are more important for longer price movements. Investors who want to track investment demand in China or production changes can get this data from the World Gold Council quarterly reports, which are published in the middle of each quarter. These reports can form the basis of understanding the fundamentals of the gold market.
Inflation is one of the key determinants for gold prices over longer-term horizons. High inflation may cause gold prices to rise. However, in the short term, higher inflation may have an impact on interest rates; if traders believe that higher inflation leads to interest rate increases, such reports could hurt gold prices. Because of the relationship with the dollar, US reports on inflation are the most important and they are published twice per month with the Consumer Price Index (CPI) and Personal Consumption Expenditure (PCE) inflation.
This is not a specific report, but domestic and global political risks are closely watched by traders. For example, it’s not uncommon for gold prices to rise as a consequence of global unease – for example, North Korea launching a rocket test, or tensions in the Middle East intensifying.
These events often have just a short-term impact, but it might be significant. Investors treat gold as a safe asset and buy it when risk increases, while reducing their exposure when the risks start to diminish.
Additionally, keeping an eye on upcoming elections, referenda, meetings of heads of states, trade disputes, and territorial disputes are crucial to help inform about the current state of the gold market.
For domestic politics pay attention to stimulus packages and tax and regulatory changes.
They also form part of a bigger picture of the evolving configuration of the global political system and therefore the global economic system.