Gold eyes key U.S. data as markets brace for retail sales, PMI, and sentiment signals

Bullion prices saw choppy but positive price action this week, with gold holding near elevated levels as investors weighed weakening sentiment data against still-resilient hard economic indicators. Silver, meanwhile, tracked broader risk appetite and industrial outlook signals, underperforming gold at times as growth concerns lingered.

But Friday morning’s news of a fully reopened Strait of Hormuz - as long as the Israel-Lebanon and Iran-United States ceasefires hold - breathed renewed risk appetite into the market, with gold and silver prices posting strong gains as they followed equities sharply higher.

With the Middle East conflict taking a long-awaited breather, markets may be ready to refocus their attention on economic data that could shape expectations for Federal Reserve policy and, in turn, the direction of precious metals, though the calendar features a sparse slate of indicators.

The week begins with  a look at the strength of the U.S. consumer with the Tuesday morning release of U.S. retail sales for March. Recent data has been mixed but generally resilient, but many analysts are pricing in some weakening after their surprising recent strength. For precious metals, a stronger-than-expected print could pressure gold by reinforcing higher-for-longer rate expectations, while a miss would likely support gold and silver prices.

Attention will then turn to pending home sales for March, which will shed light on the interest-rate-sensitive housing sector. Analysts have noted ongoing strain in the market, with builders reporting difficulty pricing homes due to the uncertainty surrounding material costs, while the broader housing environment continues to reflect pressures from rising costs and high interest rates. Weak housing data would underscore the drag from tight financial conditions, which would typically be supportive for gold as it raises expectations for eventual policy easing.

The Senate confirmation hearing for Kevin Warsh to become the new Federal Reserve chair is also scheduled for Tuesday, amid scrutiny over his $130 million in personal assets and potential conflicts of interest. Democrats are still pushing to delay the hearing, citing the ongoing DOJ investigation into current Fed officials. Warsh is expected to sound dovish notes on monetary policy, which would be supportive of higher gold prices, as lower rates would reduce the opportunity cost associated with holding gold.

Thursday morning's weekly jobless claims report will provide next week’s only insight into labor market conditions. Despite rising macro uncertainty, analysts have characterized the labor market as being in a “low-hire, low-fire” phase, with claims staying remarkably low by historical standards. A meaningful uptick in claims could quickly shift that narrative, boosting gold as recession hedging intensifies.

Later on Thursday morning, traders will be watching the Flash S&P Global Composite PMI for April, a key real-time gauge of economic activity. Economists are increasingly cautious about the growth outlook, with National Association for Business Economics (NABE) survey participants warning that “the outlook ‘shifted quickly and meaningfully,’” according to Gregory Daco. The same survey noted that “the risks are skewed to the downside,” reflecting growing concern that momentum in both manufacturing and services may be fading. For gold, any downside surprise in PMI could reinforce safe-haven demand, particularly if it signals a broader slowdown.

Finally, the week will close with the final reading of the  University of Michigan consumer sentiment survey, a closely watched measure of household confidence. Sentiment has deteriorated sharply since the start of the Iran conflict, with inflation expectations rising well above already-pessimistic expectations. White House economic adviser Jared Bernstein acknowledged the disconnect, noting policymakers face “an uphill battle trying to persuade the public they are doing better.” Weak sentiment, even alongside solid hard data, tends to favor gold by highlighting underlying fragility in the economic outlook.