Posted on November 24, 2014
Gold prices are hovering near the unchanged mark to begin the holiday shortened trading week. As of this post, the price of gold is trading just below the $1200 level.
This week may be quiet from a trading standpoint. Markets will get some data to chew on, however. Today, investors will get the latest readings on PMI Services Flash as well as the Dallas Fed Manufacturing Survey. Tomorrow will bring Q3 GDP data as well as Consumer Confidence, the Case-Shiller Index and the Richmond Fed Manufacturing Index. On Wednesday, investors will see the latest on Durable Goods Orders, Weekly Jobless Claims, New Home Sales and Consumer Sentiment. All Markets will be closed Thursday for the Thanksgiving Holiday. Friday will bring the the latest reading on Chicago PMI.
The U.S. Dollar index was higher overnight but has since eased up a bit. A higher dollar may continue to limit gold’s upside as a stronger greenback makes the price of gold relatively more expensive to foreign investors. While gold can rally in spite of a higher dollar, it does seem that at this point the gold bulls simply do not have enough in the tank to drive gold higher with the dollar at current levels. One has to wonder if the Euro may be close to finding some type of bottom. If nothing else, the Euro appears to be oversold and therefore there is the possibility of a pullback in the dollar at some point.
In addition to the dollar, stocks also appear to be making life tougher for the gold bulls. Stocks seem intent on posting more new all time highs, and investor sentiment seems to be running strong. This risk appetite is not doing any favors for perceived safe-haven assets such as gold. While this may not go on indefinitely, it is difficult to tell when the stock market may top. For now, it is quite possible that stocks continue to march higher into the new year. Should this be the case, the gold market may trade sideways for a period of time.
The technical picture in gold has improved recently. The market is trending higher on the shorter-term timeframes, but the bulls still have a great deal to prove. While it is possible that gold has found a near-term bottom, it is also difficult to say given the amount of headwinds faced by the precious metals sector. The bulls have thus far not been able to show much follow through to rally days, and the market likely needs to see some significant upside on good volume to gain more momentum.