Posted on July 07, 2014
Gold prices are losing a bit of ground today to begin the new trading week, and as of this post are near the session lows. While the gold bulls still have some momentum going for them, the recent failure of gold prices to take out the April highs in the $1331 area is something worth noting. Could we be looking at a false breakout in gold? Possibly-but it’s too early to tell. It would seem that given the current geopolitical landscape gold prices may find support before falling too far. What is far more likely is that we are already witnessing the summer doldrums trade in markets as investors spend time on vacation and away from trading screens.
This week, investors will have some things to chew on, however, it is a fairly light week from a data perspective. The FOMC minutes to be released on Wednesday afternoon will likely be the biggest potential market mover and data point of the week. While nothing new of significance is expected in this week’s release, investors will comb through the commentary looking for any clues the Fed may give about monetary policy. In addition, investors will also pay close attention to the Fed’s assessment on economic activity.
As always, precious metals investors will continue to watch equities as well as the crude oil market. Equities continue to seemingly march higher with impunity and oil has showed some signs of weakness in recent trade. In fact, oil has broken through a rising trend line to the downside, and we could potentially see a lot more oil bulls scrambling for the exits. Unfortunately for the gold bulls, weaker oil and stronger stocks are not likely to help gold move higher.
Gold appears to be the victim of some mixed signals currently-and that could potentially lead the yellow metal no where. In fact, gold could potentially trade range bound for some time given the current strong bullish and bearish influences. While some still believe that gold may have its time to really shine again if/when the stock market breaks, there is simply no telling when that may occur and if it does occur. For now, it would seem key that the gold bulls hold prices above the psychologically important$1300 level. Should the gold bulls not be able to hold this level, then gold could potentially see a dramatic slide lower as sell stops get triggered and late longs liquidate positions.