Gold prices are seeing some mild selling pressure this morning as a lack of bullish news is allowing the bears to retain firm technical control of the market. Many markets are also quiet following the Easter weekend, and volumes may be on the lighter side.
Gold seems to be simply missing any bullish news at this point, and without some type of bullish catalyst to drive prices, the bears are likely to stay in control. This week will be a fairly light week from a data standpoint. Investors will get the latest readings on: Leading indicators, existing home sales, Richmond Fed Manufacturing, PMI manufacturing, durable goods orders, weekly jobless claims and consumer sentiment.
The situation in Ukraine appears to have calmed-at least for the time being. Vice President Joe Biden will reportedly be heading to Kiev later this week for talks with Ukrainian officials, and it seems at this point that Russia may be willing to sit down and discuss a potential resolution to the ongoing crises. This is certainly a step in the right direction, and thus far widespread violence has been avoided. Hopefully, it will continue to be avoided and a diplomatic solution may be found. Gold prices have not seen much of a flight to safety bid during the ongoing crises-and unless there is a large escalation it seems that investors may be willing to continue to put money to work in stocks and risk assets.
Speaking of stocks, gold investors will likely continue to pay close attention to the equities markets. Following recent selling pressure in equities, the stock market has quickly bounced back. The question now becomes whether or not the equities markets are preparing for a new leg higher and new all time highs or if the recent buying proves to be nothing more than a bounce before continued selling. It seems that if stocks continue to move higher, the gold market may have a tough time putting together any meaningful rallies. Fortunately, looking at the charts it doesn’t seem that investors will have to wait long to see what stocks do here. If this does prove to be formidable resistance in equities, perhaps we will see bargain hunters begin stepping into gold again near current levels.
The bears remain in solid technical control on the daily chart. Near term support remains in the $1280 area while near term resistance may be seen at last week’s highs around $1331. A breach of $1280 on the downside could potentially set the stage for a test near the $1240 level.
