Gold prices are slightly weaker in early trade to begin the new trading week. Stocks and crude oil are flat to lower while the dollar index also loses ground.
With many people currently on vacation, trading action this could could potentially be on the lighter side of the ledger.
Gold has been under some selling pressure in recent trade as overall risk appetite has remained steady. Recent terrorist attacks in Brussels and Pakistan are on investors’ radar, although have thus far not driven significant selling in equity markets.
In addition to geopolitical factors, the gold market is also looking for any further clues from the Fed about the timing and pace of further rate hikes. Recent hawkish commentary from some Fed officials has been weighing on gold as well, and any further indications of additional rate hikes could potentially drive more selling in the yellow metal.
Markets and investors will get plenty of data to contemplate this week. Investors will scrutinize the latest readings on the Pending Home Sales Index, Dallas fed Manufacturing, Personal Income and Outlays, S&P CaseShiller Housing Price Index, Consumer Confidence, MBA Mortgage Applications, ADP Employment Report, Weekly Jobless Claims, Chicago PMI, PMI Manufacturing Index, ISM Manufacturing, Consumer Sentiment, Employment Situation and more.
While all of this data can potentially move markets, Friday’s non-farm payrolls data will likely have the biggest influence on markets and will likely be closely watched the policy makers. Consensus estimates are looking for an addition of 210,000 jobs with the unemployment rate steady at 4.9 percent.
A better than expected number could potentially give the Fed reason for another hike sooner rather than later, while a significant miss could potentially give the central bank further reason for pause. Given many of the geopolitical factors currently influencing global markets, the Fed will likely want to be very cautious with regards to further hikes as hiking too much too soon could stop growth and cause investors to flee.
The Fed is also in an interesting predicament given the fact that other central banks, such as China and the ECB, are looking for further ways to stimulate their economies.
This divergence in monetary policy could potentially drive volatility in equity markets, currencies and other risk assets.
While the gold bulls are hanging on, a test of the $1200 level could be in store and a failure to hold this level could potentially see gold moving lower once again.
