Market Overview: The gold market is under some pressure in the early trade today to begin the new trading week. Stocks are set to open sharply higher as the upcoming “Brexit” vote now appears to be leaning towards the “stay” camp. Stocks had seen some volatility last week on concerns over a possible exit vote and risk aversion had been increasing. The selling being seen in gold today thus far, however, appears to be relatively minor given the rally being seen in equities. The current decline in gold may prove to be another buyable dip.
Key Data Points: Without a doubt, Thursday’s “Brexit” referendum will be the most key piece of news this week. While sentiment has shifted a few times, it appears that as of right now the country will vote to remain in the EU. This has stock investors feeling a lot better and investors are buying equities today in the hopes that this issue will soon pass and be put to rest. Of course, there is always the possibility of a surprise, so stocks may see somewhat limited gains ahead of the vote and perceived safe haven assets, such as gold, may see limited downside ahead of the vote.
In other news, this week will be on the light side from a data standpoint. Markets will get the latest readings on Existing Home Sales, PMI Manufacturing index Flash, New Home Sales, Leading Indicators, Weekly Jobless Claims, Durable Goods Orders and more.
Investors will be watching the data closely for any further clues of strength as this could potentially influence the Fed regarding its plans with interest rates.
Outside Markets: Stocks opened sharply higher today as worries over Thursday’s “Brexit” vote have largely dissipated. While there could be some back and forth action in equities this week as the vote approaches, stocks still have something to prove. If the “Brexit” vote ends up being a non-event, stocks could make another run at previous highs.
The dollar index is trading sharply lower this morning likely due to more optimism about Great Britain. The dollar looks weak from a technical standpoint and could potentially see a retest of the May lows. A breakdown below this level could possibly set the stage for a significant leg lower in the dollar, which could in turn potentially boost gold and precious metals.
Crude oil is up modestly today and remains near the $50 per barrel level.
The Big Picture: Gold remains near recent highs and looks poised for further upside. Even with a British vote to remain in the EU, the gold market appears to have a number of factors working in its favor including slow global growth and negative interest rates. Dips in gold are likely to be bought at this point, unless a significant move lower is seen. With the idea of the Fed holding rates lower for longer, gold may potentially see ongoing buying interest until more clarity is seen. It is possible, however, that rates will remain around current levels for some time and that may be considered bullish for gold and silver.
