Gold prices are steady in early going Monday morning as stocks, crude oil and the dollar all drift lower. In weekend news, the People’s Bank of China surprised markets by cutting interest rates. The central bank cut the one year loan rate by .25 percent to 5.35 percent, and also cut the one year deposit rate by .25 percent to 2.5 percent.
The Chinese economy has seen some ups and downs in recent months, and the central bank cited deflationary pressures as motivation for the rate cut. While markets are not currently showing much reaction, anything done to boost China’s economy may be seen as being bullish for gold and other commodities.
In other weekend news, Russian opposition politician Boris Nemtsov was shot and killed outside the Kremlin. 70,000 people marched on Sunday in memory of Nemtsov, and there are multiple theories as to why this man was killed. The murder may destabilize the country further, and could potentially ignite further protests among dissenters. On the other hand, if it is believed or determined that other forces were at work, the killing could also potentially put Russian leader Vladimir Putin in a position to rally the country together and gain support.
The next few weeks in Russia will be very important. Swift government crackdowns on opposition protests will likely further alienate Russia from the West, and Western governments may decide further sanctions are warranted. The country may further isolate itself from the rest of the world as hopes for a diplomatic solution to the ongoing conflict in Ukraine fade.
This week will be a busy one from a data perspective. Markets will get the latest readings on PMI manufacturing, ISM manufacturing, PMI services, ISM non-manufacturing, Beige Book, weekly jobless claims, and factory orders. Friday’s non-farm payrolls data for February will likely be the biggest data point of the week. Consensus estimates are looking for an increase of 230,000 jobs with an unemployment rate of 5.6 percent.
Should the jobs data exceed expectations, it could help ignite a further rally in stocks. A better than expected number would also likely fuel speculation of an interest rate hike by the Fed sooner rather than later. On the other hand, should the jobs data disappoint, stock investors may potentially see reason to take some risk off the table.
Gold appears to be in a holding pattern currently. While the bears remain in technical control of the market, the gold price has thus far held the $1200 level on this recent move down. $1200 and $1180 may act as near term support for gold while $1220 and $1240 may act as near term resistance.
