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    JM Bullion Weekly Market Preview (6/6/16)

    Market Overview: The gold market is seeing some follow through buying from Friday’s strong gains to begin the new trading week. Overall, risk appetite appears to be quite healthy today as stocks are higher while yields are declining. This week will be lighter from a data standpoint, and investors will likely continue to digest Friday’s much weaker than expected non-farm payrolls data.

    Key Data Points: Fed Chairwoman Janet Yellen will be giving a speech later this afternoon that may be the data highlight of the trading day. Following Friday’s disappointing labor data, investors may be looking for any clues as to the timing of the next rate hike. A June hike would appear to be completely off the table at this point, with odds of a July hike lower as well.

    Whether or not Ms. Yellen discusses Friday’s data in detail remains to be seen. She may simply elect to acknowledge the poor report, and reiterate that the central bank will look to increase rates in the coming months when they feel such a move is appropriate.

    This could potentially leave markets with a degree of uncertainty until the next FOMC meeting later this month.

    Investors will look to Weekly Jobless Claims, MBA Mortgage Applications and Consumer Sentiment later in the week for a sense of economic activity.

    Outside Markets: Stocks are moving higher today as the S&P 500 is trading above the 2100 level in early action. Stock investors appear to be feeling good as the likelihood of a rate hike this month or next has diminished. This could set the stage for a significant challenge of previous all-time highs. Higher stocks and strong appetite for risk could potentially weigh on gold.

    The dollar index is slightly lower in early trade after seeing a strong decline on Friday. Following the weak labor data, the dollar index slumped over 1.6 percent and could see some follow through selling in the coming sessions. Dollar weakness could potentially fuel further buying in gold, even as stocks move higher and risk appetite remains elevated.

    The Big Picture: With Friday’s strong rally, the gold bulls may be back in the driver’s seat. That being said, further upside in gold could be relatively subdued as markets await further clarity from the Fed. If the central bank signals that another hike may be some time off, or if the data shows further signs of weakness, gold may see some renewed buying interest and could potentially return to recent highs.

    If the Fed still appears to have a more hawkish tone in the coming weeks, however, the rally in gold could be short lived.

    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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