Gold is weaker this morning to begin the new trading week as chart consolidation and profit taking continue. Several key markets are flat this morning in early trade including stocks, crude oil and the dollar index.
Gold continues to be susceptible to further selling pressure as risk appetite remains robust. The SP500 index has been on a steady trend higher since seeing some selling and volatility come into play at the beginning of the year. The chart appears to be pointing higher yet, and stocks could potentially be headed for a test of the all-time highs. Rising equity prices may continue to weigh on gold, and a lack of fresh bullish inputs could possibly drive further selling in the yellow metal.
This week may potentially see some added volatility going into Easter weekend. Markets will be closed this Friday in observance of the Good Friday holiday while banks will remain open. Heading into the weekend, investors will get more economic data to scrutinize. Investors will get the latest readings on Existing Home Sales, PMI Manufacturing Index Flash, New Home Sales, Durable Goods Orders, Weekly Jobless Claims, PMI Services Flash, GDP and more.
Following the recent commentary from the Fed, investors will likely continue to monitor the data stream closely. The central bank has maintained that any decisions on rates will be data driven, and while there have been signs of ongoing strength in the economy there are a number of risks that remain. The central bank will likely tread lightly as additional rate hikes could potentially spook markets and possibly slow growth. Recent dovish commentary from the central bank could be considered potentially bullish for gold,however the yellow metal is also having to compete with stocks and other risk assets.
The crude oil market appears to have stabilized after driving market action for some time. Crude is holding firmly above $40 per barrel at this point and could potentially see further appreciation on short covering and speculation. On the other hand, if oil were to roll over and begin declining again, risk aversion could once again grip global markets and potentially drive stocks lower while driving perceived safe haven assets such as gold higher.
Gold remains in a firm uptrend and any dips will likely continue to be bought until proven otherwise. A break back below the $1200 level could, however, drive selling in the market and could potentially put gold on the defensive once again.