Spot gold prices were lower again on Monday as a stronger dollar and uncertainty surrounding the fed's exit strategy take their toll. The gold market continues to be a closely watched market here as the possibility of additional heavy selling hangs over it. The market will see a lot more data compared to last week however, and perhaps this data will give a clearer picture of things to come.
Today a reading on retail sales was released and throughout the week the markets will also get readings on import and export prices,the producer price index, the consumer price index, manufacturing, weekly jobless claims, consumer sentiment, and leading indicators. Charles Plosser speaks tomorrow as well as Thursday.
Mr. Plosser appears to be one of the more hawkish fed governors and his comments have the ability to move markets. Of particular interest to the gold market will be the cpi and ppi numbers. These inflation numbers are expected to show more of the same-which means pretty much no inflation. Any surprises in these numbers however, could have an impact on bullion prices.
After all, it is believed that one of the reasons that gold has seen such an exodus is because there does not appear to be any inflation in sight-in fact many now consider deflation to be a much more realistic threat. Time will tell... In addition to the inflation numbers, investors will be watching the economic data very closely.
At this point, investors are expecting to see continuing improvement in the data stream. Should the data stream remain strong, it bolsters the case for the fed to take a more hawkish approach and the likelihood of the fed beginning its stimulus removal sooner rather than later increases. Not only that, but the stock market has continued its seemingly never ending march higher but is starting to look just a little bit tired.
Perhaps the data this week will determine if equities keep moving up or if it is time for a breather. It would appear that gold has also suffered from investors chasing returns, and stocks- and if the market does begin to correct many investors could be quick to take profits and then find themselves in a position of trying to decide where to put there money. We feel this could be a beneficial scenario for gold. We'll just have to see how it plays out this week.
From a technical standpoint, the gold bears are in control. The market failed in recent weeks to take prices above some key moving averages, and also has fallen from the 62% retracement area of the large down move. Now obviously things can turn on a dime, but these both appear to be bearish indications that lower prices may be seen in the very near future.
