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    JM Bullion Weekly Market Preview (5/23/16)

    Market Overview: The gold market is seeing some moderate selling pressure in early trade this morning to begin the new trading week. Markets are still digesting the latest FOMC minutes and preparing for a possible rate hike next month. The notion of a June rate hike is weighing on gold, and stocks are holding ground. The gold market appears to be in need of some fresh inputs, and a lack of any fresh bullish catalyst could leave the market vulnerable to a larger pullback.

    Key Data Points: This week will be somewhat light in terms of data release. Today, markets got the latest reading on PMI Manufacturing Index Flash. This figure registered just above the breakeven level of 50 with a reading of 50.5. A couple Fed officials will also be speaking today at various events.

    The rest of the data week will feature the latest readings on New Home Sales, Durable Goods Orders, Weekly Jobless Claims, Pending Home Sales Index, GDP, Consumer Sentiment and more. While markets are open Friday, many traders and investors may be taking the day off for the long Memorial Day Holiday weekend. This could potentially lead to decreased trading volumes and little significant market movement.

    Outside Markets: In early trade today, stocks are slightly higher, crude oil is slightly lower and the dollar index is moving up.

    In recent action, dollar strength has likely weighed on gold as the greenback bounced back sharply from a brief break under key support. The dollar is now on the offensive, and with the possibility of a June rate hike could potentially see further upside in the coming weeks. This could keep further upside in gold limited and may even help fuel a larger pullback in gold prices.

    Stocks have remained resilient even with the notion of a June hike. After a brief selloff, stocks have held their ground and could potentially remain relatively range-bound for the time being.

    The Big Picture: While the gold bulls are still in control, the market has been under some pressure and could potentially see further selling in the absence of any fresh bullish catalyst. The lack of further selling pressure in equities currently is also likely a bearish factor for gold as risk appetite has remained relatively strong. Gold may continue to see lackluster performance or sideways trade until the next FOMC meeting.

    Things can change quickly, however, and another bout of selling and volatility in China or other markets could potentially drive some risk aversion and potentially fuel buying in perceived safe haven assets such as gold and other precious metals. A breakdown of the March lows in gold could potentially signal an end to the current rally and a return to sub $1200 per ounce levels.

    Disclaimer: All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.

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