With U.S. markets closed today in observance of Good Friday, investors will be looking ahead to next week. While markets are closed today, banks are open and data is still being released.
This morning, investors got the latest reading on GDP for the fourth quarter of 2015. The data showed the economy grew more than expected with growth of 1.4 percent versus consensus estimates of one percent. The report showed that the U.S. economy grew by 2.4 percent last year matching the growth seen in 2014.
Today’s GDP data could potentially sway opinions on whether or not the U.S. may be headed back into recession. At the same time, the data could potentially bolster the notion of additional rate hikes by the Fed.
The central bank’s plans regarding interest rates remain a topic of debate. While many signs continue to point to further strengthening of the economy, economic risks remain. The Fed will likely tread very carefully with regards to further hikes as hiking too fat too soon could potentially halt growth and make investors anxious.
Next week’s non-farm payrolls data for March could potentially have a significant impact on the Fed’s plans going forward. A strong jobs number will almost certainly compel the central bank to consider another hike, while a weaker than expected number could give the Fed more reason for pause.
The jobs data could also have a significant potential impact on gold and precious metals. Gold has been on the defensive in recent trade as more hawkish rhetoric from some Fed officials has driven some profit taking and selling. A stronger than expected jobs report would not only likely boost the notion of another rate hike but would also likely fuel buying in the dollar index, also weighing on gold in the process.
The gold market appears headed towards a test of the key $1200 level in the near future. This level could potentially find some significant buying interest, however, a decline below this key level could potentially drive fresh selling in the market and possibly end gold’s recent uptrend.
While gold has been moving lower recently, it should be noted that markets sometimes have a tendency to return to previous breakout levels before once again moving higher.
Whether or not this proves to be the case with gold remains to be seen but the $1200 level is likely the key to gold’s price action in the near-term.
