Gold is moving lower in early trade today as stocks, crude oil and the dollar index all move higher. Gold prices have once again fallen back below the psychologically important $1200 level and may be poised to retest the $1180 area.
Gold is likely falling as bulls exit the market after prices failed to make a fresh swing high. In addition, higher equities and a higher dollar are likely taking a toll as well. Gold has been relatively range bound for some time now, however should the market not hold at near term support it could potentially mark the beginning of a fresh leg lower in prices.
Over the weekend, the People’s Bank of China lowered its bank reserve requirements by 1 percent in an effort to further stimulate its economy. While this may be considered bullish for gold and commodities in general, the gold bulls do not appear to be too impressed.
Greece is back in the headlines in a major way as global markets are closely watching ongoing talks between the country and its creditors. Thus far, negotiations on the country’s debt do not seem to be getting anywhere, and some sources feel the two sides are very far apart in terms of a deal. The clock is ticking, and although markets do not seem overly flustered as of yet, that could change quickly as the deadline approaches. Gold may potentially benefit if a deal is not reached soon, and general risk aversion could potentially set in to markets in a major way.
This week is on the lighter side from a data perspective. Markets will get the latest readings on weekly jobless claims, PMI manufacturing, existing home sales, durable goods orders and new home sales. While all of this data will be scrutinized, it is likely the non-farm payrolls data for April due out in a few weeks that investors will pay very close attention to.
With so much ongoing debate over the Fed and its plans with regards to interest rates, this number may be a key factor in any decision by the central bank. Another weaker than expected number may force the Fed to sit tight on rates, while a strong rebound could potentially pave the way for the Fed to begin hiking.
Gold may stay in a trading range until more is known. In the absence of a bullish catalyst, the precious metals complex may trade relatively sideways for some time. A potential Greek exit from the EU, however, could possibly provide the gold bulls with reason to buy and may drive prices higher should a “Grexit” occur.
