Gold prices were lower today to finish out the trading week. The trading month and quarter will both be coming to an end next, and investors may remain hesitant on buying until the beginning of the new quarter.
Gold has seen some decent upside recently as the dollar index has been pulling back. With the euro trading over 1.09 currently, however, one must wonder how much gas the shared currency may have left in the tank. While the large amount of short positions in the euro could potentially lead to a significant rally in the currency if they are unwound, the overall picture for the euro remains bearish.
Ongoing uncertainty over the potential for a Greek exit from the EU could keep the euro under pressure and the dollar firmer. Markets have been closely monitoring talks between Greek leaders and EU officials, but thus far it appears that nothing of real substance has been accomplished. While the matter has been swept under the rug to a degree in recent weeks since Greece was granted an extension on its existing bailout, the four month extension will be approaching an end quickly. Without any light at the end of the tunnel, global financial markets could get very nervous and selling could potentially be seen across risk assets.
In other news, Saudi coordinated military airstrikes in Yemen may become more of a focus in the marketplace next week. Gold may potentially see additional buying interest should risk aversion begin to take hold.
Next week will be a holiday shortened trading week with the Good Friday Holiday. While the data will be released on Friday, investors will not have a chance to react until Monday. As a holiday shortened trading week coinciding with month end and quarter end, volatility may be seen in trading action next week.
The gold market is still also pondering the Fed’s next move. Removal of the word “patient” from the central bank’s language after its recent meeting on interest rates does not appear to have given markets much more clarity. Currently, bets on rates are going back and forth between a June rate hike and a September rate hike. Some are even of the opinion that the Fed may elect to wait beyond those times. The Fed did seem to leave the door open for waiting further, and said the decision will be based on economic data being observed. Gold may remain somewhat range bound until more clarity on the first hike and any additional hikes is observed.
