The gold market is flat in early action today to begin the new trading week. Stock futures, crude oil and the dollar index are all higher this morning.
The gold market is closing in on what would be its largest monthly loss in 2 ½ years. Gold prices are at their lowest levels in nearly six years as the notion of a U.S. rate hike takes hold and the dollar index strengthens.
While a potential rate hike by the Fed may continue to take center stage, the markets will have plenty of other things to chew on this week. Investors will get the latest readings on: Pending Home Sales, Dallas Manufacturing Survey, Chicago PMI, Motor Vehicle Sales, ISM Manufacturing Index, Construction Spending, Productivity and Costs, ADP Employment Report, Beige Book, Weekly Jobless Claims, Factory Orders, ISM Non-Manufacturing and more.
Friday’s non-farm payrolls data for November will likely be the most important piece of data released this week. Consensus estimates are looking for 190,000 jobs added with the unemployment rate steady at five percent. This is the same amount of jobs that were expected for October, which came in sharply higher at 271,000 jobs added.
A better-than-expected jobs number will almost certainly etch in stone the Fed’s plan to hike rates in December. Even a number in line with estimates or slightly weaker will also likely keep a rate hike forthcoming. It would seem that at this point a significant miss would have to be seen to make the Fed think twice about a hike before year’s end.
The next Fed meeting will take place on December 15th and 16th. At that time, more of the uncertainty surrounding the Fed’s plans will likely be removed and markets may decide what they want to do until the end of the year.
While gold has been considerably weaker this month, the yellow metal could see another push lower as a knee-jerk reaction to a rate hike. Another move to the downside could potentially see more capitulation and could possibly represent a longer-term bottom. Another potential move lower in gold could possibly see prices test the $1000 per ounce mark or lower.
The dollar index and equity markets will likely continue to be closely watched by gold investors. The dollar appears poised for a significant leg higher which could weigh on gold and precious metals. Equity markets are not far from all-time-highs once again and further stock strength may also weigh on gold and precious metals.
