Market Overview: U.S. markets are closed today in observance of the President’s Day Holiday. The gold market has much to digest from recent data points and commentary from the Fed. There are a number of interesting dynamics at work right now that could potentially fuel some significant market movement in the coming weeks and months. Gold rising along with bond yields, for example, could potentially spell trouble for the equity markets. In addition, the Trump administration continues to remain the center of attention in the financial media, and markets are vulnerable to considerable headline risk as the administration looks to implement its policies. Gold may remain well-bid as ongoing uncertainty surround the administration and its policies fuels a degree of risk aversion.
Key Data Points: There are no economic reports set for release today. Investors will, however, have more data to chew on later this week. Some major pieces of economic data set for release include Weekly Jobless Claims, MBA Mortgage Applications, New Home Sales, Consumer Sentiment, PMI Services Flash and more.
The biggest data point of the trading week will likely be Wednesday’s release of the latest FOMC meeting minutes. Investors will be looking for any further clues as to the timing of additional rate hikes by the central bank as well as the Fed’s assessment on economic activity. The minutes may be even more highly scrutinized following recent data pointing to building inflationary pressures and hawkish commentary from Fed Chairwoman Janet Yellen.
Outside Markets: Stocks remain not far from recent highs, and could potentially be poised for another leg higher. Stock investors have thus far shrugged off many of the negative headlines coming from financial media, and appear willing to give the new administration the benefit of the doubt. Stocks have seen further upside in recent weeks on the notion of significant tax reforms, and a strong package of reforms from the Trump administration could potentially fuel more upside in equities. A package that is found to be lacking, however, could also potentially put the brakes on the recent rally and possibly even fuel profit taking in equities.
The Big Picture: Gold has continued its ascent even with some stronger than anticipated economic data and a more hawkish-sounding Fed. The coming weeks and months may be very telling in terms of what the Trump administration may be able to accomplish. Ongoing geopolitical uncertainty surrounding the administration and U.S. relations with Europe, China, Mexico and elsewhere may keep a floor under the price of gold. The gold market also appears poised for further upside from a technical standpoint, and any dips in gold are likely to be met with bargain hunters.
