Gold prices are flat today as light holiday trade seems to be the theme of the day. Markets may very well be quiet all week as investors look forward to the long fourth of July holiday weekend.
This week will be fairly light from a data perspective. Today the markets got the latest readings on Chicago PMI, pending home sales and the Dallas Fed manufacturing survey. Tomorrow, markets will see the latest data on the PMI manufacturing index, the ISM manufacturing index, construction spending and motor vehicle sales. Wednesday will bring the Challenger job-cut report as well as the ADP employment report. In addition, the latest data on factory orders will be released and Fed Chairwoman Janet Yellen will be speaking in the afternoon on monetary policy to the IMF central banking conference. Thursday will likely carry the greatest potential punch with regards to data. Markets will see the latest readings on ISM non-manufacturing, weekly jobless claims, the PMI services index, international trade and the non-farm payrolls data for the month of June. The non-farm payrolls data will possibly be the biggest potential market mover of the week. Consensus estimates are calling for an increase of 211,000 jobs with the unemployment rate steady at 6.3 percent.
Gold and silver have seen some renewed buying interest recently as geopolitical risks heat up and the Fed has reiterated its plans to keep interest rates suppressed for the foreseeable future. The CFTC’s commitment of traders report is showing that large speculators have been increasing positions in gold and silver. In fact, according to the disaggregated report, money managers increased their net long positions by 72 percent from the week prior. Futures contracts saw an increase of 22,912 contracts which is indicative of new buying. It seems that many investors needed some time to digest the recent comments by the Fed, and after having some time have concluded that the central bank will remain dovish for the time being.
Although the renewed interest in gold is positive for the gold bulls, it also means that the market must continue to show some positive momentum or the fresh bulls may see fit to exit their positions in a hurry and thus potentially drag gold prices lower. From a technical standpoint, gold remains on the positive side, however, the market must take out the April highs soon in the $1331 area or risk a lot of bulls deciding to liquidate at the same time. Near term support may still be seen at last week’s lows and in the $1280 area.
