Demand for gold surged to an 11-year high last year. This is due to large-scale purchases on the back of high activity by retail investors and a slowdown of ETF outflows.
The Labor Department's August jobs data is due out at 8:30 a.m. ET on Friday. The labor market is expected to remain strong. According to a Bloomberg survey of economists, the nonfarm payrolls may increase by 300,000 in August.
This may be the force playing into the Fed's interest-rate decision at the meeting scheduled for September 21. The employment data will be keenly anticipated by investors. The main reason for this is that Fed Chairman Jerome Powell gave a "hawkish" speech at the Jackson Hole symposium, in which he emphasized that a softening labor market will result in lower inflation.
U.S. stocks tumbled after Powell's comments, with all three major indices hitting four-week lows on Friday.
The Nasdaq fell 3.9%, and the S&P 500 dived 3.3%, with both indices setting for their biggest daily percentage loss since June 13. The Dow Jones Industrial Average dropped about 3% on Friday, losing 1,000 points.
There are signs inflation is beginning to moderate, but at the same time it continues to remain far above the Fed's 2% target. According to data released on Friday by the Bureau of Economic Analysis, consumer prices show a slowing pace from the previous month. The headline PCE showed a 0.1% drop from June to July, driven by declining energy prices. On a year-over-year basis, headline PCE was up 6.3% in July.
The core PCE, the Federal Reserve's preferred inflation metric, went up by 0.1% month-over-month in July and 4.6% compared to the previous year. It is considered the lowest annual increase since last October.
Nevertheless, as reported by Powell, the Fed might consider another "unusually large" rate hike in September. Earlier, Fed officials increased its benchmark interest rate by 75 basis points in June and July.
As for other economic data, ADP will again release its private sector employment report on Wednesday after a short break in June and July. The new methodology has been developed for the report. According to economists surveyed by Bloomberg, the number of new private sector jobs is expected to increase by 300,000 in August.
The monthly ADP report is published two days before the U.S. government's official report. Although the data it contains may not be as accurate, the report gives an overview of job growth over a certain period of time.
The Job Openings and Labor Turnover Survey (JOLTS), a monthly job cut report, produced by the recruiting firm Challenger, and initial weekly jobless claims are also scheduled for this week.
The U.S. reporting season is almost over. However, some company reports that may potentially have an impact on the markets are still expected. The flow of data for investors will come from Best Buy, HP, Big Lots, Chewy, Lululemon Athletica and Broadcom.