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    JM Bullion Weekly Market Preview (5/11/15)

    Gold prices are trading near the unchanged mark this morning to begin the new trading week. It could prove to be an interesting week for the yellow metal, as a Greek debt payment to the IMF looms and ongoing talks between Greece and its creditors do not appear to be accomplishing much.

    Gold may also see some renewed buying interest as the People’s Bank of China surprised markets and cut interest rates last night. The central bank lowered its lending and deposit rates in another step towards boosting its economy. The central bank has made several such moves in recent months, and appears to be willing to continue taking such measures as long as necessary.

    While the China news may affect gold and commodity prices, the other potential driver is the 750 million Euro debt payment Greece is due to make to the IMF tomorrow. Greece has not been able to reach a deal with its creditors after months of ongoing negotiations. Yields on short-term Greek debt would seem to indicate that investors feel the country is likely default on at least part of its debt.

    While gold is not showing much buying interest thus far today, that could change quickly if Greece is unable to make the payment. The reality is, however, that Greece has a number of much larger payments coming due this summer to the ECB, and there are very serious concerns about its ability to pay. While Greece may postpone the day of reckoning once again tomorrow, one has to wonder how much longer the country can hold out as cash reserves are nearly drained.

    This week will be lighter than last from a data perspective. Given recent commentary from the fed as well as last week’s non-farm payrolls data for April, investors will likely be closely scrutinizing the data for further reinforcement of interest rate views. The central bank has continued to hold the line of any rate decision  being “data dependent” and should data begin to improve again it may pave the way for the fed to hike.

    On the other hand, much of the data seen in recent weeks has been on the softer side. Should this trend continue,  the fed may elect to sit tight for the time being. Stocks may continue higher, should this be the case, and may start hitting new all time highs.

    Gold and other perceived safe haven assets may have to bide their time until the equity rally is over. On the other hand, should Greece default, gold and other asset classes could potentially benefit significantly as investors may elect to sell stocks quickly and put their money to work elsewhere.

    Disclaimer: All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.

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