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    JM Bullion Weekly Market Preview (12/28/15)

    Gold prices are moving lower today as crude oil sinks, stocks decline and the dollar index moves slightly lower. Light holiday trade could potentially see markets remain somewhat flat all week, although the potential for volatility is present.

    Concerns over China and the global economy appear to be taking center stage again today as the Shanghai Composite index tumbled 2.6 percent, its biggest decline since November. The sell-off in China is hitting crude oil prices this morning, while shares of energy companies are also under pressure.

    Concerns over China and its slowing economy along with worries over the strength of the global economy are likely to be an ongoing theme in 2016. While Chinese markets have remained relatively calm following severe volatility seen in late summer, investors could potentially start selling again if the data stream remains disappointing.

    If stock weakness is seen in China, it will likely spill over to other markets. While U.S. markets have remained stable since dropping significantly in August and September, a new year is right around the corner and with it could come further volatility and equity weakness. Stock strength has likely been a key factor in gold’s lack of upside. A change in investor sentiment entering the New Year, however, could potentially change gold’s fortunes.

    While gold has seen some weakness following the first U.S. rate hike in nearly a decade, the market has avoided making a new, significant low. This could change as investors return from the holidays, however; the debate over the pace of further interest rate hikes may be the primary driver of gold to begin the first quarter of 2016.

    While another leg lower in gold is certainly a possibility at this point, the market has thus far not made a run towards the $1000 per-ounce level that many have been calling for. While such a move towards $1000 or even lower could potentially represent a final wash-out type of sell-off, the gold bulls could also potentially make a stand at current levels. In the absence of further selling pressure, shorts may elect to cover and bargain hunters may step into the market.

    This week will likely be very thin and with little economic data set for release, price action may remain choppy at best. Markets will be closed Friday for the New Year Holiday, and investors will likely wait until next week before getting back to business.

    Disclaimer: All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.

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