SVC-Update
Weekly Market Update
Overview
The first full trading week of the new year begins under heightened geopolitical uncertainty. Given the current situation in Venezuela, it is prudent to initially observe the market’s reaction before drawing conclusions. In addition to the ISM PMIs, the primary focus this week will be on Friday’s Non-Farm Payrolls report.
SVC Breakdown
USD
Since Christmas, the US dollar has staged a modest recovery and formed a short-term low. A continuation of this rebound appears plausible in the near term, before fundamental drivers regain dominance.
The conflict involving Venezuela over the weekend is unlikely to have long-term implications but may provide temporary support for the dollar. This week’s attention is firmly on US labor market data. Due to the recent government shutdown, the last employment report showed further signs of labor market softening. It remains to be seen whether this trend persists. A continued deterioration in labor market conditions would add further fundamental downside pressure on the US dollar.
Gold
The past three years have been exceptionally favorable for gold investors. After a brief retracement, primarily driven by profit-taking, gold reached a new all-time high on December 22. Since then, prices have corrected by approximately 5%, while Bitcoin has outperformed in relative terms.
Despite this short-term pullback, gold remains structurally and fundamentally attractive. A weakening US dollar, the ongoing debasement trade, and rising geopolitical tensions continue to support demand for safe-haven assets.
Other commodities, such as silver and copper, have also experienced impressive rallies. However, my focus remains on gold. A particularly compelling indicator is the gold-to-silver ratio, which is currently at a multi-year low, suggesting that gold may offer superior relative value compared to silver going forward.
Upcoming News
ISM PMIs
JOLTS Job Openings
Non-Farm Payrolls
Consumer Sentiment
Wishing you a successful trading week ahead,
David Gauch
Founder, Gauch Research
I’m broadly aligned with this base case, and I like how it separates near-term catalysts from the structural backdrop. The most useful part is making the view falsifiable. What’s the one indicator you’d watch first if markets start moving against the base case?