Market Overview: Gold is seeing some slight selling pressure in early trade today to begin the new trading week. Investors are still digesting Friday’s commentary from several Fed officials, including Fed Chairwoman Janet Yellen and Vice-Chairman Stanley Fischer. Officials from the Fed symposium in Jackson Hole, Wyoming appeared to take on a more hawkish tone, with Mr. Fischer even suggesting that two rate hikes this year is a possibility. Markets will be watching the data stream very closely following hawkish remarks, with any significant misses or better than expected data fueling further speculation on the timing of the next rate hike.
Key Data Points: The Dallas Fed Manufacturing Survey will be released later this morning while personal income and outlays was released earlier and showed an increase in income while consumption slowed a bit.
The rest of the week, investors will look forward to the latest readings on Consumer Confidence, Case-Shiller Housing Price Index data, MBA Mortgage Applications, Chicago PMI, ADP Employment report data, Weekly Jobless Claims, Pending Home Sales, ISM Manufacturing and more.
The focal data point of the week will likely be Friday’s Employment Situation report for August. Consensus estimates are looking for 175,000 jobs added with an unemployment rate of 4.8 percent.
This report could be huge, as it will almost certainly influence the Fed’s decision regarding a possible September or December rate hike.
Outside Markets: Stock index futures are slightly higher in early action today while crude oil declines, interest rates fall and the dollar moves higher. The dollar saw some strong buying following the hawkish rhetoric from the Fed symposium, and may see further buying on the notion of higher rates.
Stocks remain near all-time highs, although could come under pressure if and when the Fed does tighten. Overall, risk appetite is still robust, although interest rates remain near recent lows even as equities move higher. This divergence of sorts could potentially be noteworthy.
Market action may remain slightly quiet as many investors take last minute vacations and as the Labor Day Holiday approaches.
The Big Picture: The gold market has been holding support at current levels, but needs to see some bullish price movement. The market remains vulnerable to further selling, and any positive economic data may drive more selling in the yellow metal as it may boost the odds of a rate hike this year. While gold may see some initial downside on another rate hike, the pace and timing of any further hikes is likely to be quite slow, and any significant downside in gold may potentially provide an advantageous long-term buying opportunity.
