Posted on July 28, 2014
Gold prices are moving slightly higher to begin the new trading week as stocks are showing some early weakness this morning. Fortunately, the weekend did not bring any new notable headlines on the geopolitical front, and in the absence of any new significant headlines this week, markets may return to looking at the data and market fundamentals.
Today, markets will get the latest readings on the pending home sales index, Dallas Fed Manufacturing and PMI services flash. Tomorrow, investors will get to digest the Case-Schiller housing index as well as consumer confidence. Wednesday will pack a punch data-wise as markets will see the latest data on Q2 GDP as well as the ADP Employment report. Wednesday afternoon will see the release of the FOMC meeting decision on monetary policy. Thursday will bring weekly jobless claims, the Challenger job-cut report and Chicago PMI. Friday will end the data week with a bang featuring the release of motor vehicle sales, the PMI manufacturing index, consumer sentiment, construction spending, the ISM manufacturing index and the U.S. Department of Labor’s jobs report for July.
The FOMC and the jobs data Friday will likely garner the most attention from investors this week. Although no significant changes are expected from the Fed, investors will listen closely for any clues as to the Fed’s assessment of economic conditions as well as the Fed’s plans going forward. A Fed that sounds dovish may be beneficial to gold and precious metals, while if the Fed has more of a hawkish tone it could potentially lead to some selling pressure in gold.
With so much jobs data this week, investors may find reason to try and extend the rally in stocks should the data show continuing improvement. On the other hand, many are looking for a market top in the near future-and a weaker than expected jobs report could potentially give the bears something to work with.
A stronger dollar and higher equities have proven to be significant obstacles for the gold bulls. Gold has not been able to get any significant rally going, although on the other hand gold has not suffered any significant selling either. It seems that the yellow metal may be comfortable in its current trading range and is simply standing by for either a bullish or bearish catalyst that can potentially propel prices out of this range. As we have stated, it is difficult to imagine gold prices falling with the current geopolitical landscape, but anything is possible. Stocks and risk appetite or lack thereof will likely continue to hold the keys to gold’s future for the time being.