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:
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Gold is set to end the week near $4,550/oz after failing to hold last week’s consolidation above $4,725 and sliding toward a major psychological support level.
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The week’s primary driver was hotter-than-expected inflation data, with CPI and PPI readings pushing markets to back away from earlier expectations for one to two Fed rate cuts in 2026.
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Kevin Warsh’s confirmation as the next Federal Reserve Chair amplified that hawkish repricing, lifting the US Dollar Index and Treasury yields while driving a sharp Friday drop of roughly $100/oz in gold.
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Next week’s macro calendar is lighter, but a busy slate of Fed-speaker appearances, Warsh-related Q&A, the ongoing war in Iran, and shifting institutional gold flows should keep traders alert.
So, What Kind of a Week Has It Been?
At the start of this trading week, we believed that the immediate macro environment might be one of relative calm, and that while there would not be any strong shocks that could spike volatility in the gold market, the yellow metal could be positioned to continue consolidating above $4,725/oz and possibly lift higher. That turned out not to be the case, as gold prices have been driven lower for most of the week: first in a slow but constant slide following hotter-than-expected inflation reads for both US consumers and producers, and then in a sharp drop on Friday as markets fully priced in their initial projections of what the “Warsh Era” of the Federal Reserve will mean for monetary policy in 2026. As a result, gold spot prices are set to end the week around $4,550/oz, just moderately above a major psychological level.
Hot Inflation Resets the Rate-Cut Tape
CPI data released on Tuesday morning showed that consumer prices in the US, on an annualized basis, heated up more than expected last month, with “core CPI” (excluding food and energy costs) rising by +2.8% YoY and the comprehensive measure spooking investors with a climb to +3.8%. The higher headline inflation number was not terribly surprising, given the upward pressure that the US and Israel’s war on Iran and the closure of the Strait of Hormuz are putting on oil and energy prices. But the month-over-month core CPI number also increased by more than the consensus projections.
The next morning, month-over-month manufacturing cost inflation for the US economy came in considerably higher than expectations, with overall PPI at +1.4% (versus +0.5% expected) and even core PPI rising to +1.0% (versus +0.3% expected). Gold continues to be caught in a contradictory loop from a historical standpoint: despite being the benchmark for an investment to hedge against inflation, these numbers are pushing sell signals for the yellow metal due to the implications for rate policy, which are the much more dominant focus of investors and traders across several asset classes.
Following the inflation data reports, investors eased back from previous positions that implied and expected one to two interest rate cuts from the Fed in 2026, possibly even in the first half of the year. Several analyst desks have gone as far as repricing their projections for just one rate cut from the Fed this year if they were pricing in two, or none at all if they were pricing in one. This shift not only dampened gold valuations directly, but also pushed the US Dollar Index higher alongside Treasury yields, further weighing on the precious metal.
Warsh Confirmation Adds a Hawkish Layer
Also on Wednesday, the US Senate confirmed the nomination of Kevin Warsh as the new Chair of the Federal Reserve, effective Friday. Warsh is viewed as a more hawkish head of the US central bank despite being nominated by an administration that very publicly campaigns for rates to be lowered. This has solidified the shift in expectations for the timing and size of the FOMC’s next moves and firmly holds the potential for rate hikes on the table.
Interestingly, markets appear to have waited until the actual date of Warsh’s installation on Friday to express these views through trading and bids, rather than immediately after the confirmation vote. On Friday alone, gold prices have slid roughly -$100/oz.
Looking Ahead
Next week brings a much less busy macroeconomic schedule, aside from another busy slate of public appearances from key Fed officials in which “the new boss” is expected to be a topic of Q&As and parsing. With the war in Iran expected to continue throughout next week as well, if not deteriorate, we might have expected the geopolitical risk premium to support gold buying. But in its third month, it now shamefully seems that investors and markets are normalizing the war and its consistent impacts on stability and global trade. Gold and other primary risk-off assets simply do not seem to be getting the same inflow as they did a month ago.
Although last week’s quarterly reporting from central banks highlighted an aggressive increase in central bank buying of gold reserves in the developing world, even that support appears to be moderated by a steady outflow from other institutions that are increasingly liquidating physical gold holdings in a play for fiat-currency liquidity.
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.
