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Gold prices have had a banner week, and have seemingly resumed their strong upward trajectory. The moves come in the wake of news that the US government would open. Gold bumped up another 1.8% on Wednesay ahead of President Donald Trump signing legislation to fund the government until January 20th.

To get a better handle on what’s driving the market, we can look at how other assets are behaving in the same context. The DJIA, notably, is outperforming the Nasdaq amid mixed reaction to the government reopening. Generally, the Dow is understood to be safer, having a larger number of defensive stocks than the Nasdaq’s large collection of tech firms. Bond yields are falling, typically a sign of investors moving to safe haven assets. Yet expectations for the Fed to cut rates in December have largely been unchanged.
 

When Will Delayed US Data Be Released

It could take more than a week for the US government to return to its normal functioning after 43 days of closure. Workers are expected to return on Thursday, but there is an enormous backlog of pending work to sort through. What’s particularly relevant to the market is the economic data that hasn’t been collected in the last month and a half.

The Bureau of Labor Statistics (BLS) has been functioning with just one employee, aside from a temporary return to office to publish the September CPI. It’s expected to take several days to restore normal operations, and then the BLS could publish a new calendar for data publications early next week. Analysts believe that the November NFP data will likely be delayed by a week at least, which puts it close to the date of the next Fed meeting.
 

What Will Happen With the Delayed Data

The next concern is that some of the delayed data might not be released at all. White House Press Secretary Karoline Levitt warned that October CPI and NFP figures might not be published, because there was no staff available to collect the data at the time. Economists will have to wait for clarification on that issue from the BLS, but in the meantime, the lack of information could leave markets worried.

Economists seem to agree that the tenor of the missing data will suggest the US economy isn’t performing as well as previously thought. The expectation is that official jobs figures will be lower than private estimates, and that inflation will remain high. This would likely keep the Fed from cutting rates in December, and depress risk appetite.
 

Why Markets Are Showing Cautious Optimism

What could be a worse scenario for the markets is to have a gap in the official data and not know how to price in the Fed’s December decision. The odds of a cut have been slowly declining over the last couple of weeks, and are now in the 50s. In that situation, markets could stay defensive, which would lower US yields, weaken the dollar but push gold prices higher.

The government reopening itself is helpful for risk appetite because it reduces the uncertainty factor. However, it also generates uncertainty about what the missing economic data will reveal, or whether it will be released at all. This could provide further support for safe havens, such as gold, in the coming days.

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