Gold prices are once again moving higher this morning as some fundamental buying along with technical momentum carry the yellow metal higher.
The situation in Ukraine is once again taking center stage. Pro-Russian demonstrators continue to occupy Ukrainian facilities following the passing of a deadline set by Ukraine for them to leave the premises. Acting Ukrainian President Oleksandr Turchynov has said that the demonstrators would face a “full-scale anti-terrorist operation” by Ukrainian armed forces if they did not comply with the deadline. That deadline has now come and gone with no action taken thus far, but the likelihood of armed conflict seems to be increasing. Ukrainian officials appear convinced that Moscow is behind the protestors, and unfortunately the situation could take a turn for the worse any second.
This week will be on the lighter side from a data standpoint. Retail sales kicked off the week earlier this morning with an upside beat. This caused equities to move higher. The retail sales data could potentially help boost GDP data forecasts for Q1. In addition to retail sales, investors will get the latest readings on the Consumer Price Index, Empire State Manufacturing, the Housing Market Index, The Fed’s Beige Book, weekly jobless claims, Philly Fed and leading indicators.
The Fed’s Beige Book could potentially be a market mover this week. Investors continue to look for more clarity on the Fed’s plans for monetary policy going forward, and any indications for more or less action by the Fed could have an impact on markets. As of right now, it seems the Fed will likely hold the course on stimulus removal, but will likely continue to reiterate that rates will remain low for some time to come. This could potentially work in gold’s favor. On the other side of the coin, however, is the fact that many feel that the U.S. economy continues to heal. Economic strength could potentially work against gold as investors favor risk assets and equities.
The gold bulls have some nice technical momentum going right now. After bottoming out recently in the $1280 support area, gold has been trending higher on a daily basis, and it now looks poised for a potential run to the $1354/$1355 area. The gold market is showing some underlying signs of strength today as it moves higher in spite of higher stocks, a higher dollar index, and flat crude oil prices. Stocks have looked shaky recently, however, and gold investors will continue to watch the situation in equities closely. Further stock weakness could potentially boost bullion further.
