Gold prices are a little softer this morning to begin the new trading week. Stocks and crude oil are slightly higher this morning while the dollar index is slightly lower.
This week will be another busy one from a data standpoint. The releases begin today, with markets getting the latest data on ISM manufacturing, PMI manufacturing, construction spending and personal income and outlays. Tomorrow, markets will get the latest readings on motor vehicle sales and factory orders. Wednesday will bring the latest data on PMI services index, ISM non-manufacturing data and the ADP employment report. Thursday will bring weekly jobless claims, productivity and costs, international trade data and the Challenger job-cut report. Non-farm payrolls data for January will be released on Friday.
The non-farm payrolls data will likely be the data highlight of the week. Consensus estimates are looking for 230,000 jobs added with the unemployment rate steady at 5.6 percent.
In addition to all of the data being released, several Fed officials will be speaking this week as well discussing monetary policy and the economic outlook.
The gold market will continue to take its cues from stocks, the dollar and other economic inputs. In addition, the yellow metal may potentially benefit from increased risk aversion.
Greece remains at the forefront of headlines as the new Government attempts to establish itself. Greek bond yields have spiked while stocks have seen pressure following the victory of the anti-austerity Syriza party. While the rhetoric seems to have quieted a bit over the last few days, it is no secret that this party and the newly elected Prime Minister will look to renegotiate Greece’s debts with creditors. The ongoing uncertainty surrounding Greece may help keep a floor under gold prices and could potentially lead to more stock market volatility.
Speaking of stocks, the broader market looks to be on its heels, and further downside in stocks is possible. Should further selling take place, gold may potentially benefit as investors look to put funds to work in other asset classes.
The Fed has reiterated its intention to be patient with regards to raising interest rates, although the central bank appears to be on track to initiate the first hike in June or September. There has been some speculation that the Fed may decide to hold off given the lack of inflation and growth concerns, but the central bank appears to be holding the line and markets appear to be expecting the Fed to take action as planned. While this may be seen as bearish for precious metals, the notion of a rate hike is likely already priced into the market, and rates will likely remain at very low levels for some time.
