Gold prices are trading slightly higher on Monday to kick off the new trading week. The market appears to be finding its footing still after selling-off only to recover during Friday’s session following better-than-expected non-farm payrolls data for November. Gold investors look to be awaiting fresh data before passing judgment on prices at current levels.
This week will be much lighter than last week data wise, but will still give investors a few things to chew on as we approach the holidays. Today investors will hear commentary from several Fed officials. Richmond Federal Reserve Bank President Jeffrey Lacker will be speaking about the economic outlook in Charlotte, North Carolina. Next, St. Louis Federal Reserve Bank President James Bullard will be giving a speech about the economy in St. Louis. Finally, Dallas Federal Reserve Bank President Richard Fisher will be speaking on banking trends in Chicago this afternoon followed up a question answering session on the economy also in Chicago.
Tomorrow markets will see the latest data on wholesale trade followed by Wednesday’s latest reading on MBA purchase applications. Thursday will be the busiest day of the week data-wise with the latest readings on retail sales, weekly jobless claims, import and export prices and business inventories. Friday will bring the latest reading on the producer price index.
Of note will be the Fed officials commentary this week as investors continue to try to forecast the Fed’s next move. With trading volumes already beginning to lighten up ahead of the holidays, investors may be fairly content taking a wait-and-see approach ahead of next week’s Federal Reserve meeting. To taper or not to taper-that is the question.
While expectations of tapering remain quite mixed, there are many who feel the Fed could announce a taper at next week’s meeting given the recent strength in the data stream. While it seems unlikely that the Fed would rock the boat right before the holidays, anything is possible. Any action by the Fed could cause the equities markets to begin to blow off some froth-and that could potentially do precious metals a huge favor. We have talked in previous posts about what the potential catalyst for higher gold could be. It seems at this point that equity outflows could be gold’s best bet in the near-term. The notion of tapering appears to be old-news among gold investors, and many believe that once it actually begins gold will shine once again. We shall see but one can certainly make a logical argument for investors going into gold if the stock market loses its luster and investors search for alternatives.
