Gold prices are trading lower on Monday to start the new trading week following a holiday shortened week last week. Stocks and crude oil are slightly higher to kick off the week while the dollar index moves up as well. Investors are awaiting data on the retail sales and shopping bonanza of the last several days following the Thanksgiving holiday, and thus far reports of the weekend’s activities are mixed.
Investors will have plenty to chew on this week in addition to the holiday shopping stats. This morning will see the latest releases on PMI manufacturing, ISM manufacturing, and construction spending. Tuesday will be light in terms of data but Wednesday will pack a punch. On Wednesday, investors will see the latest ADP payrolls data, new home sales data, ISM non-manufacturing data and the Fed’s beige book. This will be followed up on Thursday by factory orders, weekly jobless claims, Q3 GDP and chain store sales. The rich data week will come to a head on Friday with the release of the much anticipated non-farm payrolls data for November as well as consumer sentiment and personal income and outlays data.
The jobs data on Friday will likely take center stage for the week in terms of data. This report will be very closely scrutinized after the surprise upside reading from October. Consensus estimates currently are for 180,000 jobs added with the unemployment rate slightly down ticking to 7.2%.
The debate rages on as to the timing and extent of any tapering by the Fed and this week’s data will likely shed some much needed light on the situation. As we have discussed in previous posts, from the gold market’s standpoint it seems as if the sooner the tapering starts the better. Most people however, are not expecting any action until sometime in Q1 of next year. This means that it is quite likely that the rally in stocks will go on into the new year before possibly getting spooked by the notion of the Fed removing the punchbowl. That in turn, could equal ongoing pressure on gold and precious metals.
From a technical standpoint, gold remains in a firm downtrend on the daily charts and appears poised to re-test the June lows in the $1182 area. It will be very interesting to see if this level is aggressively bought or if physical buyers choose to hold off and see if prices breakdown further. A break below could signal another significant leg lower in gold prices. It appears that gold prices need to maintain trade back above $1280 in order to reignite any buying interest here in the short term.
