Gold prices are under a little bit of pressure to begin the new trading week as the bears retain control of the market. The gold market has not been able to take trade above its 9 day EMA after testing this level the last few sessions, and thus seeing some selling here to start the week comes as no surprise. Although there wasn’t much in the way of news over the weekend for investors to chew on, the news that China will be expanding economic freedoms has equities and risk assets a bit on the strong side to start the week.
This week will once again offer investors plenty to sift through. Today the markets will get the latest reading on the housing market index followed by E-Commerce retail sales data. Tuesday will see commentary from Fed chief Ben Bernanke as well as Chicago Federal Reserve President Charles Evans.
Wednesday will likely pack the most punch for the week as far as investors are concerned with the release of the consumer price index, retail sales data, existing home sales, and the FOMC minutes. In addition, St. Louis Federal Reserve President James Bullard will be speaking as well. On Thursday, investors will get weekly jobless claims, the latest reading on the producer price index, PMI manufacturing data and the Philly Fed survey. Friday is a light data day to cap off what could be a very busy week.
As has been the case for the last several weeks, investors will be closely watching the data stream and listening in closely to any Fed official commentary for clues as to when and by how much the Fed is likely to taper. Although expectations for tapering were moved up due to the surprise October non-farm payrolls data, many believe that the Fed is likely to hold off until well into the first quarter of next year before making any moves as the economy does continue to show signs of fragility.
Not much has changed for gold recently, and the market simply appears to be lacking any type of bullish catalyst to take prices higher. What that potential catalyst could be remains to be seen. The dollar remains on the strong side and stocks continue to move higher as well.
Perhaps gold will bide its time until stocks begin to correct. For now, physical demand will likely be the key market driver for gold and precious metals. The $1250/$1260 area in gold could be a key area. A break below could set up a re-test of the June lows. Conversely, if gold can hold at or above this level, shorts may begin to cover and perhaps the bulls can begin to put together a more meaningful rally.
