Gold prices are moving slightly higher on Monday to kick off the new trading week. This week will likely see volumes begin to return to markets as investors come back from Holiday vacations and time off. It is also worth noting that as the new year gets under way, investors may be moving allocations around and shaking things up a bit. It will be interesting to see if investors love gold or hate it here at the beginning of the year.
Investors will also likely jump right back into the saddle this week as there are numerous data points and more set for release. Today, investors will get the latest readings on factory orders and ISM Non-Manufacturing. On Wednesday, markets will see the latest numbers from the ADP employment report. This will be followed by the release of the FOMC minutes Wednesday afternoon. Thursday will bring the Challenger job-cut report as well as weekly jobless claims data. The data for the week will be capped off on Friday with the release of the December non-farm payrolls data.
Obviously, investors will continue to monitor the data stream closely. Of particular importance this week will be the Fed minutes and the Friday jobs report. Investors will be looking for clues as to the Fed’s thinking on current economic conditions as well as any plans to continue tapering in the near future. While markets have thus far have taken the tapering with a grain of salt, pressure could begin to build as the Fed removes more stimulus. This could be a gold positive as investors look for alternative asset classes to put money to work in.
Gold prices will likely be driven this week by the FED minutes and how investors interpret them, as well as the non-farm payrolls data. In addition, it seems quite plausible that asset allocation maneuvering may play a role. While the dollar has remained above the 80 level, investors will also be watching it closely this week as a break below that level could fuel buying in gold and precious metals. Physical buying in gold appears to be picking up a bit as well, and this will likely support gold prices in the near term. The gold market has been able to put some decent distance between itself and the June lows at this point, and further strength in the yellow metal may bring more aggressive buyers into the market.
All things being equal, it seems that the first few weeks of the new year will be important for gold. So far, gold is off to a good start.
