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    JM Bullion Weekly Market Preview (6/9/14)

    Gold prices are trading slightly higher Monday morning to kick off the new trading week as short covering and some bargain hunter buying give prices a lift. U.S. stocks are looking slightly lower this morning following recent upside and may be looking to take a breather here.

    The economic calendar for this week is very much on the light side. In fact, there are no major data releases until Thursday when weekly jobless claims will be released. Thursday will also see retail sales data and Friday will have consumer sentiment as well as PPI. Light summer time trading appears to be upon us already, and it is quite possible that many markets including gold see a period of consolidation.

    Gold seems to still be very much in a sell-the-rallies mode. It would likely take some considerable upside at this point for the yellow metal to shake this sentiment. Unfortunately for the gold market, the rally in stocks just continues on without an end in sight, and it is quite possible that until we see some signs of real weakness in stocks, other asset classes such as precious metals will remain weaker. While many argue that the bull market in equities is overdone at this point, and many are sounding alarm bells, the market is always right. Until such time as the trend turns or at least weakens considerably, investors will likely continue to chase higher returns.

    One of the other problems faced by gold currently is the fact that inflation remains well below the Fed target. Gold can be bought as a hedge against inflationary pressures, but it seems that right now not many investors are feeling that to be necessary. Although crude oil is back and holding above $100 per barrel, prices in general remain relatively subdued. This could allow the Fed to hold its present course with regards to monetary policy, and may help keep stocks flying high.

    The dollar index maintaining trade above the $80 level also appears to be a headwind for gold. Last week the ECB took steps to boost their economy and fight deflation, and although the Euro was initially much weaker it later reversed course and headed higher. The dollar/Euro will be worth watching in the near term. Should the Euro come under pressure, it could pave the way for further significant upside in the dollar index and may pressure gold and silver in the process. Near term support in gold may be seen in the $1240 area while overhead resistance will likely be seen at the previous range bottom of $128oish.

    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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