Posted on April 08, 2013
Gold is trading modestly lower on Monday. Price looks to be consolidating after Friday’s strong move to the upside. There was no significant data for release on Monday however, Ben Bernanke will be speaking at the Atlanta Fed conference this evening. Tuesday is light in terms of data as well. On Wednesday, the FOMC minutes will be released. This could potentially drive gold prices.
Investors will be looking for clues as to the direction of Fed monetary policy going forward. In addition, market participants will be listening for the Fed’s assessment on economic conditions. Following the release of the Fed minutes, the market on Thursday will see the latest reading on weekly jobless claims.
This number is sure to be closely scrutinized following last week’s hugely disappointing non-farm payrolls report. Should the weekly numbers come in higher than expected, gold may again benefit from perceived safe-haven buying. On Friday,the latest data on retail sales will be released along with consumer sentiment and the producer price index. A dip in consumer sentiment, or any hints of hotter inflation in the PPI number could also potentially benefit bullion prices.
Despite more saber rattling from North Korea, gold thus far has not been bid up on geopolitical tensions. In fact, given the amount of tense rhetoric coming out of North Korea, it is somewhat surprising that gold is not moving higher-at least not yet anyway. Hopefully the situation can be diffused peacefully, but should the situation start to really escalate, gold prices likely stand to benefit. For now, many people consider the actions of North Korea nothing but talk-and many people seem to feel a military conflict is unlikely.
There have been no new developments regarding Cyprus the last few days. As we have said previously, when it comes to the EU no news is good news. But for how long? It is likely that world markets have not heard the end of Cyprus or potential banking issues in the EU….Could this be the calm before the storm? We’ll see.
From a technical standpoint the bullion market remains very much in downtrend mode. The rally on Friday was impressive, but it’s gonna take a lot more than a good one day rally to undo the technical damage that has been inflicted on the gold market recently. It will be interesting to see what happens over the course of the next few days as bullion tries to stabilize following another test of support at $1550.