Posted on September 09, 2013
Gold prices are essentially flat to kick off the new trading week as traders await any news regarding Syria as well as any news on the Fed. President Obama is expected to discuss the Syrian crises on Monday before delivering a televised speech tomorrow night. The President’s comments will likely shed some more light on the prospects of a U.S. military strike on Syria, and could drive precious metals prices. A vote on a potential strike is expected in the Senate later this week.
Gold gained ground on Friday after the U.S. Department of Labor’s non-farm payrolls data for August was below consensus estimates. While this weaker than expected data, along with downward revisions to previous numbers, was a bit surprising we do not expect much to change. Although there has been some chatter about perhaps the Fed holding off now on beginning its stimulus exit strategy, we believe that the jobs data is unlikely to sway anyone one way or the other and that the Fed making an announcement at its next meeting is still the most likely scenario.
Over the weekend, China reported strong import and export numbers for August while the latest reading on inflation was in line with expectations. GDP data released in Japan was also cheered on by markets. Essentially the data coming out of Asia has been good and points to a global economy that continues to gain some steam. This can be both a plus for gold and a minus. Overall however, we feel that gold does stand to benefit from economic strength in the region and that the potential for higher gold still remains regardless of what the Fed does next week.
U.S. stocks are sharply higher on Monday as of this post as investors here cheer on Asia and as shares of Apple climbed back over the $500 mark. Oil prices are lower today as well as the U.S. dollar index.
This is a light data week here domestically. Markets will get the latest readings on PPI, retail sales, consumer sentiment, and import/export prices. None of these reports are likely to be big movers when it comes to the gold market this week. All eyes will continue to be on the news regarding Syria as gold investors await the Fed’s next move. It is likely that the gold market sees a lot of sideways action this week. We feel that the key areas to watch right now are Friday’s lows around $1358.80 on the downside and $1400 on the upside. Prices will likely accelerate once one of these levels is breached. Given how the market reacted Friday and the fact that gold held an uptrend line, we still feel that the path of least resistance remains higher.