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    JM Bullion Weekly Market Review (4/11/14)

    Gold prices are trading flat as of this post to finish off the week. The gold bulls have seemingly reappeared in the last several sessions following a test of near term support in the $1280 level.

    Much attention continues to be paid to the equities markets. Many have seen signs of trouble brewing in stocks for some time, and we could now perhaps be on the verge of a larger scale correction in equities. Markets have seen volatility come back into play this week, and while the VIX remains at relatively subdued levels, there does appear to be caution in the air. Following last Friday’s large sell off, stocks attempted to rebound earlier in the week. This rally attempt may now be viewed as a dead cat bounce given the price action in stocks on Thursday. As of this post, stocks are once again under pressure and today could potentially prove to be nasty for equities going into the weekend.

    While gold seems to be digesting recent gains and consolidating a bit, the gold market could see further buying interest if stocks continue to weaken further. Risk aversion appears to be the theme of the week, and investors may begin to look to reallocate capital more aggressively which could work in gold’s favor.

    While the situation in Ukraine has remained somewhat quiet, it is still a cause for concern. Pro-Russian demonstrators have become more aggressive, and unfortunately the situation could escalate at any point. The ongoing conflict in the region will likely help keep a floor under gold prices for the foreseeable future.

    Also helping gold’s bullish case recently is the notion of rates staying low for an extended period. It seems that many investors may have misjudged the Fed’s forward guidance on monetary policy, and although the Fed will continue to work itself out of the QE business, the pace of rate hikes will likely stay on the slower side. This combined with equity weakness could potentially propel gold prices to much higher levels in a short period of time.

    From a technical standpoint, gold could potentially be in the process of putting in a longer term bottom. While it is too early to tell, prices seem to have met sufficient buying interest recently in the $1280 area and could be poised for another run at the $1400 level. Near term support is seen at the $1280 level while near term resistance is seen at the $1330 area.

    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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