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    JM Bullion Weekly Market Preview (5/28/13)

    Spot gold is trading lower to kick off the Holiday-shortened trading week. Not much has changed for the yellow metal in recent sessions, and perhaps this lack of change is what is keeping gold prices from moving too far in either direction. The market does in fact appear to be in consolidation mode, however, things can turn very quickly.

    Since the large gap down move on May 20th, the market has moved slightly higher price wise-with “slightly” being the key word. The bulls were able to defend the April price lows. This is obviously positive. The negative side of the equation though is the fact that the gold market has thus far not been able to get anything going to the upside. There simply is no upside momentum right now. This should not come as a big surprise however, as gold seems to have a lot more working against it than for it right now.

    The stock market dipped last week, but only modestly. The stock market opened sharply higher on Tuesday and as of right now it would seem that last week’s selling was only a very minor correction to relieve some “overbought” pressures. It should be noted though that stocks have in fact weakened as the day has gone on, and it is too early to tell if bulls will be able to hold the gains or not. Assuming they do, the market looks poised to continue to move higher which is a negative for gold prices.

    It would seem now that the cat is out of the bag when it comes to the Fed and that everyone knows higher rates are coming. The fact that the Fed is getting ready to skinny down its bond buying has helped keep a floor under the dollar.  The U.S. dollar index is sharply higher today in fact after seeing some selling last week. As of right now it looks as if the uptrend in the greenback will continue and this will likely also weigh on gold prices.

    Gold premiums appear to be contracting. It has been reported that gold premiums in India and Hong Kong are significantly lower than where they were a few weeks ago. This would seem to indicate physical demand has fallen off a bit. It makes sense that perhaps what is going on is buyers feel the last swing low in price will be violated and that the opportunity will come up to add to physical holdings at even lower price points.

    Gold prices this week will likely be largely influenced by the stock market and dollar. This is a light week for economic data, and gold’s failure to take price above key moving averages and the $1400 level may entice the bears to show their teeth once again as technical selling could ensue if upward momentum is not established in the very near future.

    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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