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Fundamental Economic Reports in Gold Trading: Major Market Movers !!!

The following economic data reports are the economic reports most carefully watched in the forex and gold trading market. These news reports will cause some price changes when they are released, meaning the price will move a bit in forex pairs and other things like XAUUSD after these news reports are released. The amount the price moves will depend on how much each news announcement can change the market: news with 3 exclamation marks causes a lot of price change, followed by news with 2 exclamation marks and then news with 1 exclamation mark.

Most people who invest money mainly trade when they see news with 3 and 2 exclamation marks because these announcements usually cause the market to move between 30 and 100 pips.

The news releases monitored by traders are detailed further below, and the specific data and figures from these reports can be located within an Economic Calendar.

Employment Report

  • Importance: !!!
  • Source: Bureau of Labor Statistics, U.S. Department of Labor.
  • News Report Release/Announcement Time: First Friday of the month at 8:30 EST, reports information for the prior month

The employment data report survey gives you figures like Non-Farm Payrolls, Average Work Week, and Average Hourly Earnings. Both surveys cover the same payroll period.

Non-Farm PayrollsThe single most important piece of data contained in the employment report generally and the establishment survey specifically is Non Farm Payrolls. As the name implies, Non-Farm Payrolls measure the number of people on the payrolls of all the non-agricultural businesses. The monthly changes in the payrolls can be quite volatile, occasionally differing by more than 200K from 1 month to the next. Non-Farm Payrolls numbers offer the most timely and thorough snapshot of the economy, these is a measure of American Middle Class & this figure translates to people withwho--have money and are ready to spend. American economy is highly fueled by consumerism with about 75% of GDP driven by consumers: the higher the Non-Farm Payrolls number the more the consumers.

Average Work WeekThe Work Week, also referred to as hours worked, is an often under rated fundamental economic indicator on the establishment survey. The average No. of the hours worked by employees on Non Farm Payrolls, NFP is an important market data the is used as a determinant of both industrial production & personal income of woker within the economy in any given month.

Average Hourly Earnings: From the establishment survey, this key stat deserves a good look. It matters for two big reasons. With total hours worked, it shows income growth that month. Plus, in boom times, folks watch it for wage hike signs. That hints at building pressures.

Unemployment RateUnemployment Rate - The percentage of people who could work and are looking for a job, out of all the people who could work, as found in a monthly study by the Bureau of Labor Statistics.

An unemployment rate around 4% to 6% is seen as good. Lower rates might cause inflation because salaries get pushed up, and higher rates could mean people spend less money.

Jobless Claims - This is a weekly statistical release detailing the count of individuals filing an initial application for unemployment benefits. This key metric for fundamental analysis, and more significantly, its corresponding four-week moving average, serves to reflect the overall health and direction of the employment sector.

Tracking jobless claims is a simple way to see how strong the job market is. If fewer people apply for unemployment, it means more people have jobs, which gives traders a good sense of what's happening in the economy.

Pretty much every job brings in income, which gives households spending power. That spending keeps the economy moving, so stronger hiring usually means a healthier economy.

Monitoring jobless claims allows investors to gauge the health of the labor market. If wage inflation becomes a concern, there is a high probability of interest rate hikes, leading to drops in bond and stock values. Only those investors who tracked jobless claims and proactively adjusted their trading portfolios to foresee these events will be favorably positioned. Fewer unemployment claims signify stronger hiring activity, and the opposite holds true.

Gross Domestic Product - (GDP)

  • Importance: !!!
  • Source: Bureau of Economic Analysis, U.S. Department of Commerce.
  • News Report Release/Announcement Time: Third or fourth week of the month at 8:30 EST for the prior quarter

The Gross Domestic Product (GDP) serves as the broadest metric for assessing economic activity. The annualized percentage change computed quarterly for the GDP illustrates the pace of growth for the entire scope of economic output. These figures are susceptible to considerable quarterly fluctuation. Specifically, changes in inventory levels and net exports can introduce substantial volatility into the GDP figures. The finalized sales metric, which notably excludes inventory adjustments, can occasionally be more illuminating for discerning underlying expansionary patterns, as inventories represent goods and products yet to be sold: thus, a substantial rise in inventory inflates the GDP but might signal underlying fragility rather than robust momentum. The principal constituents making up GDP are: consumer spending, capital investment, the balance of foreign trade (net exports), government expenditures, and inventory changes. Consumer spending is demonstrably the largest and most significant component, accounting for two-thirds of the total GDP.

Retail Sales report

  • Importance: !!!
  • Source: The Census Bureau of the Department of Commerce.
  • News Data Report Release Time: 8:30 EST around the 13th of the month (data for 1 month prior).

The retail sales report tracks total sales at stores. People follow changes closely. It shows consumer spending trends fast. Often, they skip auto sales. Those numbers jump around monthly. Watch gas and food parts too. Shifts there often tie to price hikes. Not always demand changes.

Retail sales can change a lot, and early reports often need big changes. Retail sales don't count money spent on services, which is more than half of all spending. Total personal spending is only known when personal income and spending reports come out, usually 2 weeks after the retail sales numbers.

Housing Starts & Building Permits

  • Importance: !!!
  • Source: The Census Bureau of the Department of Commerce
  • News Report Announcement Time: 8:30 EST around the 16th of the month (data for 1 month prior).

Housing Starts quantify the number of new residential construction projects initiated each month. A "start" is formally defined as the commencement of foundation excavation for a structure, predominantly encompassing residential housing. Building permits are authorizations required before excavation work can commence. Typically, an uptick in both building permits and housing starts is observed several months following a reduction in mortgage interest rates. Permits usually precede starts: however, as permits are not mandatory across all geographical regions, the volume of permits generally trails behind the volume of actual starts over time.

Existing Home Sales

  • Importance: !!
  • Source: National Association of Realtors.
  • News Report Announcement Time: 10:00 EST around the 25th of the month (data for the month prior).

As the title implies, this official release quantifies the volume of previously owned home transactions. This report is generally viewed as a solid barometer for the condition of the housing market. Housing statistics preceding this report each month focus on supply rather than fundamental demand indicators. Since Existing Home Sales data precedes other crucial demand-side housing metrics - namely new home and housing construction sales - it gains heightened visibility. Sales figures are heavily influenced by prevailing mortgage interest rates and tend to react to rate adjustments with a delay of several months. Furthermore, demand suppression built up over time, known as pent-up demand for housing, significantly dictates sales volumes: immediately following a recession, sales are characteristically quite robust due to this accumulated demand.

Chicago PMI

  • Importance: !!!
  • Source: Chicago Purchasing Managers Association.
  • News Report Release/Announcement Time: Last business day of the month at 10:00 EST for the present month.

The surveys conducted in Philadelphia and Chicago are closely monitored due to their timely nature and the fact that these areas provide a representative sample of national manufacturing activities.

Trade balance refers to a statement outlining a country's trade activities in goods and services. These include manufactured goods, raw materials, agricultural products, and aspects like travel and transportation.

This figure represents the disparity between the monetary value of goods and services a nation sells externally and the monetary value of goods and services it purchases from abroad.

When a country sells more exports than it buys imports, it runs a trade surplus. The balance counts as positive then. If imports top exports, it faces a deficit. The balance turns negative.

A trade surplus or deficit may simply indicate changes in the relative value of domestically produced goods compared to global prices. In industries that are highly dependent on exports, such as automotive, a favorable balance might indicate a rise in international demand, which could lead to job increases in that sector.

The Purchasing Managers Index (PMI) is a monthly number from the Institute for Supply Management (previously called NAPM). It shows how manufacturing is doing across the country, using things like new orders, production speeds, supplier deliveries, backlogs, inventories, prices, job numbers, and export and import orders.

It's divided into manufacturing & non-manufacturing sub-indices.

Producer Price Index (PPI) tracks average costs. It covers a set basket of goods and products that producers pay for.

PPI tracks price shifts in manufacturing. It shows average changes in sales prices. This covers producers in manufacturing, mining, farming, and utilities.

Cost inflation observed at the manufacturing tier frequently transfers through to the Consumer Price Index (CPI) figures.

How inflation relates to interest rates is key to knowing how information like the PPI impacts the markets & what you put your money into.

Philadelphia Fed Survey - This index represents a composite diffusion measurement reflecting the general manufacturing health within the geographical confines of the Philadelphia Federal Reserve district.

People track this survey for manufacturing trends. It links to the ISM survey and industrial output index.

The Philly Fed survey gives a very close and full picture of the production industry, how busy things are there and where they may be going. Since manufacturing is a big part of the whole economy, what's in this report really impacts how currency prices act.

Certain ancillary indices from the Philly Fed report also yield directional clues regarding commodity valuations and broader inflationary indicators.

Personal income measures dollars from all sources for people. Outlays cover buys of lasting goods, short-term items, and services.

Income and outlays data gauge economic strength. Income lets households spend or save.

Consumer spending fuels economic activity and growth. The expenditure component of economic reports shows a more direct correlation with the economy, which, as we know, generally dictates market behavior.

Consumer expenditures constitute a two-thirds fraction of the entire economic activity: consequently, understanding consumer behavior provides a strong indication of the economy's trajectory. Unsurprisingly, this affords investors a considerable edge.

New home sales - the number of newly built homes sold in a month - track housing price trends.

This measures not just demand for housing, but overall economic momentum. People only buy homes when they feel good about their finances.

This small fact spreads big effects through the economy. It hits markets and your investments hard.

By monitoring economic data such as new home sales, investors can derive specific investment ideas as well as general guidance for portfolio management.

Each time a new home construction project commences, it results in additional construction jobs and income that will be reinvested into the economy.

When a house is sold, it makes money for the builder and the realtor. Changes in the new home sales data give helpful hints about the stocks of builders, mortgage lenders, and companies that sell furniture.

Money supply - These measures track money based on how easy it is to use. Shifts in these numbers show policy direction. They hint at economy growth and inflation risks.

Monetary aggregates (individually known as M1, M2, and M3) were highly relevant several years ago because the data they provided indicated the Federal Reserve's level of restraint (tight or loose) over credit conditions within the economy.

The Fed sets goals for how much the money supply should grow. Historically, if growth went outside these goals, the Fed often changed interest rates.

Today, we have a better understanding of monetary policy because of the level of the federal funds rate. Paying attention to the money supply became less popular in the nineties because the financial system changed, and the Federal Reserve changed how it handles monetary policy.

The Federal Reserve is creating new ways to estimate the money supply, so given how economic indicators become popular and then fade away, don't be surprised if monetary aggregates become important again.

International trade tracks the gap between imports and exports of goods and services. The balance level, plus shifts in trade flows, shows foreign trade patterns.

How much we bring in and send out, along with the difference between the two, tells us a lot about our economy and others. Also, this info can really change things in all trading markets, especially how much a dollar is worth.

Demand for foreign goods and services in the United States is reflected in imports, while demand for American products in other nations is reflected in exports. Because this imbalance increases the demand for foreign currencies, changes in the deficit run by the United States may have an especially impact on the dollar.

This report provides a breakdown of USA trade with major countries as well, so it can be instructive for traders who are interested in diversifying globally. For example, a trend of accelerating exports to a specified country may signal economic momentum and investment opportunities in that country.

Industrial production and capacity use track factory, mine, and utility output. It's a weighted index of the nation's physical goods.

The rate of capacity utilization is an indicator of how effectively existing resources are being employed. Economic participants monitor this metric closely as it often provides insight into the prospective performance of various investment classes.

Industrial production tracks output from factories, mines, and utilities. Manufacturing makes up a quarter of the economy, so this report sways currency prices a lot.

The capacity use rate shows how much factory space is active. When it climbs over 85 percent, it risks creating production jams that push up prices.

The Federal Reserve pays close attention to this report and decides on interest rates based on whether production issues could cause prices to rise.

Housing starts - Housing starts are a way to measure how many homes are starting to be built each month. Builders usually don't start building a house if they don't think they can sell it quickly.

Fluctuations in housing statistics provide valuable insights into the demand for homes and the overall forecast for the construction sector. Additionally, each time a new house is initiated, construction employment increases, and income is reinvested into the economy.

Construction spending tracks the dollar cost of new work. It covers homes, businesses, and public jobs. Data comes in regular dollars or adjusted for inflation.

Businesses invest in the construction of new factories or offices only when they are confident that the demand is sufficiently strong to warrant such expansion.

The same is true for those who are putting money into a home. That's why how much is spent on building is a helpful basic sign of how strong the economy is overall.

Consumer Confidence IndexConsumer Confidence Index - Survey of consumer attitudes concerning both the current situation as well as their expectations in regards to the economic conditions carried out by The Conference Board. Five thousand consumers across the country are surveyed each month.

How confident people feel about the economy directly affects how much they spend. People spending money makes up two-thirds of the entire economy, so the markets always want to know what people are doing and how they might act soon.

Increased consumer belief in the general economy and their own personal financial standing correlates with a higher probability of spending activity.

Considering this, it becomes apparent that the index of consumer attitudes offers valuable insights into economic trends. It's important to note that consumer confidence and retail sales don't necessarily align in their month-by-month movements.

The Consumer Price Index (CPI) represents the average price levels of a fixed basket of goods and services purchased by consumers. Monthly CPI changes serve as a metric for assessing inflation rates.

CPI is the most watched basic sign of how prices are rising in the US. Inflation means that prices for most things are generally going up. How inflation and interest rates relate is important for knowing how CPI data affects markets.

By watching how inflation changes, whether it's high or low, going up or down, those who trade can guess how different kinds of investments will do.

Durable goods orderThe durable goods orders show the new orders given to local manufacturers for factory-made goods for now and later. Orders for durable goods tell how busy factories will be in the next few months as they work to fulfill those orders. This information shows how much people want things like refrigerators and cars, and also how businesses plan to invest in the future.

If companies allocate more resources towards equipment and other capital investments, it indicates that they are undergoing sustainable growth in their business. An increase in spending on investment goods and products paves the way for enhanced productive capacity within the country and reduces the likelihood of inflation. This trend provides investors with insights into the manufacturing sector, a crucial element of the economy, and thus significantly influences their investment decisions.

Existing home sales refer to the number of homes that were sold in a closed transaction during the month and are a significant portion of the market compared to new homes. They reflect housing price trends and serve as a barometer for both housing demand and economic momentum.

People buy homes when they feel secure in their finances. Home sales don't always add new output. But they do create income for realtors once closed.

Gross Domestic Product sums all goods and services made by local or outside firms. It shows if a nation's economy grows or shrinks. GDP gives the widest view of output and growth. Investors watch it close. It shapes how their holdings do.

GDP report contains a treasure-trove of information which not only paints a picture of the overall economy, but tells traders about important trends within the big picture. GDP components like consumer spending, business and residential investments & price (inflation) indexes spot light the economy's under-currents, which can translate to investment opportunities and guidance in managing a portfolio.

The Retail Prices Index serves as the United Kingdom's leading measure of consumer price inflation. It represents an average measurement of the changes in prices for goods, products, and services intended for consumption by the majority of households in the UK.

It is put together and comes out every month. After it is released, it is not changed. Retail Price Index has details about food and drinks, tobacco products, homes, things for the house and help provided, items for personal use and help provided, travel costs, car costs, clothes, and fun things and help provided.

Inflation stats help economists, firms, and leaders. The Bank of England's committee sets UK rates to hit the inflation goal from the finance minister.

Wage deals, pensions, and benefit changes often tie to the Retail Price Index. Utility rules limit price shifts based on this index.

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