Spot gold is not doing much of anything here today. After being a bit higher earlier in the session, gold prices are now trading basically unchanged on the day. London is closed today and that could be a contributing factor to today’s lackluster price action.
Today, and the rest of the week for that matter, is very light data wise following last week’s onslaught of reports and central bank meetings. The gold market is watching developments in the Israeli/Syrian conflict. These tensions however, do not thus far appear to be putting a bid into bullion.
Of course, should the situation begin to escalate, then gold could potentially benefit from safe-haven demand. Gold also seems to be getting continued buying interest from China, which also is supportive of the metal. All in all, there simply is not much different to report from last week.
Gold continues to consolidate in a tight sideways range at current levels. Perhaps one of the most encouraging aspects of the gold market right now is how well it held up during the marathon of economic reports and central bank meetings last week. Friday’s non farm payrolls report came in much better than expected, and not only that but the prior revisions showed substantial improvements as well.
This could have been a catalyst for bullion prices to sell off but they did not. This could be a show of strength and indicate that bullion prices may not be deterred by higher equities prices and an impr0ving economy. We shall see. Looking at the week ahead, gold will have plenty of opportunity to demonstrate how it reacts to equities. The stock market continues to make new all time highs, will we see gold prices falter or will we see an upside breakout? Again, we shall see.
Without much data to scrutinize this week, gold will likely take its cues from equities, crude oil, and the dollar. In addition, gold may see some price action based on the technical picture. Gold is still trading sideways along its 20 day exponential moving average (EMA) and thus far has not been able to take it out. Not only is the market trading along this key moving average, but it is also still trading in the 62% retracement area from the down move.
In our experience, gold prices do not tend to sit still for very long, and we suspect we will see the market breakout of this consolidation pattern. Of course, which way is the major question… For now, the bulls are maintaining some good technical posture, and therefore we feel the bulls may have a slight advantage here and we could see higher prices shortly.
