Gold is trading slightly lower but not far from the unchanged market to begin the week. Gold prices hit a one month high overnight, and would seem to be taking a little breather here thus far to start the day session. Although many investors are still trying to figure out exactly what to make of last Friday’s dismal non-farm payrolls data, the markets will also have plenty of new things to digest this week.
Today, Atlanta Fed President Dennis Lockhart will be speaking on the economic outlook. Tomorrow, investors will get the latest readings on retail sales, import and export prices, and business inventories. In addition to tomorrow’s data, two Fed officials-Richard Fisher and Charles Plosser, will be speaking as well. On Wednesday, investors will get the latest readings on the Producer Price Index, Empire State Manufacturing as well as the release of the Fed’s latest beige book. Chicago Fed President Charles Evans will be speaking as well as Atlanta Fed President Dennis Lockhart. Thursday will bring the Consumer Price Index, weekly jobless claims, the housing market index and the Philly Fed survey. Friday will cap the week off with the latest releases of consumer sentiment, industrial production and housing starts. Richmond Fed President Jeffrey Lacker will be speaking on the economy as well.
This week should be particularly interesting from a data standpoint. The non-farm payrolls data miss last week has many talking about the future of the Fed’s QE and the possibility in light of the jobs data that the Fed will now hold off longer than expected with regards to further tapering. While this number last week is likely in and of itself not enough to change the Fed’s course of action, if further weakness is seen in some readings this week it could certainly set off some red flags. In addition, with many Fed officials speaking this week, gold investors will be paying close attention for any clues as to the Fed’s tapering plans going forward.
Gold had been acting more bullish prior to the non-farm payrolls data and the miss could throw fuel on the fire for the gold bulls. Physical demand for gold has remained robust-and with the Chinese Lunar New Year approaching at the end of the month a further increase in physical demand may be seen. Perhaps this physical demand will be enough to help the gold bulls punch through resistance from $1260-$1280. This area will likely be a battleground in the near-term and may tell us if the rally in gold has real legs to it. If gold cannot break through this level to the upside, there could be a good possibility that gold trades range bound for the foreseeable future.