Market Overview: Gold and silver are under some slight pressure today as stocks appear to be poised to bounce back once trading opens for the day. Calling this past week uneventful for gold would be an understatement. The yellow metal has traded in a very tight range all week, and investors may simply be waiting for additional inputs before taking action one way or the other. Risk aversion has continued to dwindle, and the lack of any bullish headlines has left gold fighting to stay on the offensive. Gold may remain in a tight range ahead of next week’s FOMC meeting.
Key Data Points: Investors will get the latest release of PMI Manufacturing Index Flash later this morning in what is a very light day datawise. Markets may end the week on a quiet note, as significantly more data is set for release next week and investors also look forward to the FOMC meeting on Wednesday.
Outside Markets: After seeing some selling yesterday, stock index futures are pointing to a higher open for today’s session. There has seemingly been more and more talk of the market becoming overheated, and while a pullback is possible any pullbacks could potentially be relatively shallow. The Vixoften referred to as the fear gauge is at relatively low levels and could potentially be indicative of complacency on the part of investors.
That being said, however, stocks are really the only game in town as treasury yields remain not far from recent lows. This, along with an accommodative Fed, could keep equities well supported for the time being.
The dollar index is moving higher today and appears to be poised for further gains after trading sideways for a few weeks. The greenback strengthened considerably following the June 23rd Brexit referendum, and could potentially see further buying on global economic uncertainty and the notion of additional rate hikes in the U.S.
The Big Picture: The overall trend in gold remains higher, however, gold could potentially see some additional downside. Gold has not been able to challenge the recent highs, and could find itself declining further before finding some support and bargain hunters. A stronger dollar, stronger stocks and general appetite for risk have weighed on gold recently, and could continue to do so in the absence of any fresh bullish inputs. While the Fed will likely not take any action regarding interest rates next week, markets will be very interested in the central bank’s comments and any clues given could potentially be market moving.
