Market Overview: The gold market is seeing some modest selling pressure in early trade as stocks move slightly higher and interest rates rise. Markets are not showing much of a reaction to yesterday’s terrorist attack in France, and unfortunately it seems that such events have become frequent enough that any market response is limited. The gold market may be in the midst of a larger pullback as some profit taking and back and fill trade takes place.
Key Data Points: This morning, markets got the latest reading on CPI which showed that producer price pressures have not yet trickled down to the consumer. CPI for June rose just .2 percent for a very weak year-over-year reading and ongoing lack of acceleration to the upside.
Retail Sales data released today showed June was a great month, with retail sales jumping by .6 percent. Consensus estimates were looking for a rise of just .1 percent.
Today’s Empire State Manufacturing survey was not encouraging as the gauge showed a reading of .55, still in positive territory but not by much. The primary components of this survey did not paint a pretty picture for June, as employment and backlogs both declined. This sector has seen some volatility, but overall remains mostly flat.
Outside Markets: Stocks are moving further into fresh all-time high territory today as the broad market S&P 500 climbs by several points. The recent upside breakout in equities may potentially keep a lid on gold prices for now anyway but one has to question just how far equities may be able to go given the current economic backdrop. That being said, with interest rates remaining near all-time lows, stocks may be considered the only game in town to potentially produce any yield, and many investors may feel like they have little choice but to continue to be equities.
Crude oil is seeing a slight bounce higher today but remains quietly on the defensive.
The dollar index is seeing some modest upside today and has been in a consolidation pattern for several sessions. The greenback could potentially be gearing up for an upside breakout, and if that proves to be the case, gold and precious metals could potentially come under additional pressure.
The Big Picture: While gold has pulled back from recent highs, the pullback thus far has been relatively mild. This type of pullback comes as no surprise following recent upside, and buyers may continue to step in and buy any significant dips. Gold has held up well given the current move higher in equities, in what may be a good sign of underlying strength.
