Market Overview: The gold market is seeing some modest gains in early trade today while the silver market sees some modest losses. Gold has been on the defensive in recent sessions, and could potentially see some additional downside pressure as stocks move further into new all-time high territory. Some profit taking in gold should come as no surprise, however, following recent gains seen in the yellow metal. The bulls still appear to have the overall advantage, and the current dip in gold could potentially provide a great buying opportunity. With little economic data set for release this week, gold will likely take its cues from any headlines as well as outside markets.
Key Data Points: The only key piece of economic data set for release today is the Housing Market Index. Today’s reading is expected to show another bump following a rise seen in June. Should this be the case, it may potentially point to further improvement in the housing sector, which has shown some signs of strength but nothing to write home about yet. Ongoing low rates may possibly give housing a boost, and improvements seen in housing may potentially spill over into other areas of the economy.
As far as the rest of this week goes, investors will also get the latest readings on Weekly Jobless Claims, MBA Mortgage Applications, Existing Home Sales, Leading Indicators, PMI Manufacturing Index Flash and more.
Outside Markets: Stocks continue to move further into fresh all-time high territory, and this new leg higher could potentially expand. The notion of rates staying lower for longer is likely a major factor in the rise of equities, but may also be considered bullish for gold and precious metals. That being said, however, gold may see somewhat limited upside if stocks continue a sharp ascent higher.
While rates ticked slightly higher last week, they are dropping in early action this morning. The ongoing divergence between higher stocks and lower interest rates will likely come to a head at some point, and that could potentially mean stocks topping out or bonds bottoming out.
The dollar index remains near recent highs and is not showing signs of any real weakness currently. Should the greenback begin a fresh leg higher, however, it could potentially weigh on gold and silver and drive further selling in the yellow metal.
The Big Picture: While gold is experiencing a modest pullback from recent highs, the bulls appear to be in control and this may simply be another dip that is bought by bargain hunters. Trading volumes will likely begin to slow heading into August, and the gold market will likely be driven by headlines, strength or lack thereof in equities and any further clues from the Fed regarding the pace and timing of any additional rate hikes.
