Gold prices are trading slightly higher to kick off the new trading week. The precious metals complex is mixed however, and there does not appear to be a whole lot of conviction one way or the other today. A bounce in gold would not be unexpected following the selling pressure seen in the metal last week.
The gold market will once again have plenty to digest this week. Later this morning, investors will get the latest reading on factory orders. Tomorrow the latest reading on ISM non-manufacturing will be out followed up by leading indicators on Wednesday. On Thursday, investors will see the data for Q3 GDP as well as weekly jobless claims. Friday will likely be the biggest data day of the week with the non-farm payrolls report due out for October as well as consumer sentiment and personal income and outlays. As if that isn’t enough for Friday, Fed Presidents Dennis Lockhart and John Williams will both be speaking Friday about the economy and monetary policy.
The non-farm payrolls data will be closely watched as investors are anxious to see some of the damage caused by last month’s partial government shutdown. Consensus estimates are for an increase of only 120,000 jobs with an unemployment rate of 7.3%. This data is widely expected however, and it is not likely that such a poor reading will rattle markets much at this point.
Investors will be watching the data stream closely however, as the recent weakness seen in some areas could potentially keep the fed on hold for longer than expected. The dollar will also continue to play a crucial role in gold prices here, and could see some volatility before the ECB policy meeting later this week. The dollar index thrust back above the 80 level last week as the Fed sounded a bit more hawkish in its remarks. Should this dollar strength continue, then gold may remain under pressure. On the other hand, should the data continue to disappoint, the greenback could see some weakness creep back in and thus potentially give gold a boost.
Gold prices are in no man’s land here to a degree. Although the metal has now fallen below its 9,20 and 50 day EMA’s, it has not fallen far below and thus far appears to be trying to halt the bleeding. The next few sessions in gold could be critical for the bulls and the bears as a near term direction will likely be decided soon. The bulls need to take prices back above those moving averages which are currently in the $1325 area. The bears will be looking to make a decisive break lower which would start with taking out last week’s lows in the $1305 area.