Gold prices are moderately lower in early trade today as longs book some profits and the market sees some consolidation. After reaching the $1270 per ounce level on Friday, the market saw some selling come into play and thus fat today that selling is seeing some follow through. Equity markets are calm thus far today and the increasing risk appetite seen in recent weeks may be weighing on gold.

The crude oil market is also moderately lower today while the dollar index is moving higher, also likely fueling some selling in the yellow metal. The recent rise in oil prices is likely a major contributing factor to higher equities and improved appetite for risk.

This week will be a busy one from a data perspective. Markets will get the latest readings on PPI, Retail Sales, Empire State Manufacturing, Industrial Production, Housing Starts, Weekly Jobless Claims, Leading Indicators, Consumer Sentiment and more.

Perhaps the most widely anticipated data point of the week will be the FOMC meeting announcement and subsequent press conference on Wednesday afternoon. The Federal Funds target is expected to remain unchanged at this month’s meeting but investors will be looking for any clues about the potential for further hikes in the future. The central bank may once again point to global risks during its announcement as a reason for holding off on further tightening for now. The Fed may acknowledge some improvements that have been seen since the January meeting, although it is likely that the central bank will want more time to assess global financial conditions.

Given the current difficulties being seen in China and elsewhere, the Fed will want to avoid raising rates prematurely, scaring investors in the process and possibly slowing growth.

The dollar index remains near the low end of its recent trading range, and further dollar weakness could potentially drive more buying in gold and precious metals. The dollar, along with stocks, gold and other assets, could possibly see some quiet trade ahead of the FOMC announcement as investors sit on the sidelines.

Gold still looks very strong from a technical standpoint and may see further buying on subsequent dips. While a lower dollar and some general risk aversion have given gold a boost in recent weeks, improving risk appetite and higher equities could potentially weigh on the metal if ongoing improvement is seen. In addition, any clues from the Fed about further hikes in the near future could also potentially drive some profit taking and selling in the yellow metal.