Gold prices are moving slightly lower this morning to begin the new trading week. The gold market may see some consolidation following the large gains seen last week. The stock market is moving a bit higher this morning to start the new trading week, and thus far just continues to show signs of underlying strength.
This week will be a fairly busy one from a data perspective. Today, markets will get the latest readings on the PMI Manufacturing Index flash as well as the most recent data on existing home sales. Investors will see more home sales data tomorrow in the new home sales data as well as the Case Schiller Housing Price Index. In addition, investors will get the latest data on consumer confidence and the Richmond Fed manufacturing Index. Wednesday will see the final GDP reading for Q1 of this year as well as durable goods orders. Thursday investors will see the weekly jobless claims data as well as the KC Fed Manufacturing Index and personal income and outlays data. Friday will cap off the data for this week with the release of the latest consumer sentiment data.
Gold has a number of things going on right now that are likely driving prices. The situation in Iraq is a huge source of global concern. The stock market thus far does not appear too fazed by the violence in Iraq, however, should the situation continue to deteriorate it is possible that this could potentially be the catalyst for a stock market correction. Stocks just seem almost unstoppable at this point with the SP 500 eying the 2000 handle. The market does appear to be quite complacent, however, and this could potentially lead to trouble. Gold seems to be benefiting from the situations in both Iraq and Ukraine-and unfortunately neither of these conflicts appear to be near resolution.
Higher crude oil prices may also potentially be playing a role in gold’s recent upside. Crude oil may target the $110 per barrel mark in the very near future. A break above resistance in this area could potentially see oil prices move sharply higher-and quickly. Higher oil has the potential to derail the stock market and in addition may cause investors to worry more about higher prices in general. Both of these potential outcomes could possibly benefit gold and precious metals.
For now, the gold bulls are eying the April highs in the $1331 area. A break above this resistance area could see prices targeting the mid $1350s in short order.
