Market Overview: The gold market is moving slightly lower in early trade today and could be seeing a little position squaring ahead of the long Memorial Day holiday weekend. Trading volumes are likely to be very light today as many investors have started their weekends already. The gold market finds itself on its heels currently, and without any fresh bullish inputs, more longs may be happy to sell going into the weekend.
Key Data Points: While volumes will likely be very low today, there is some important economic data set for release. Earlier this morning, first quarter GDP was revised slightly higher to an annualized reading of .8 percent. Consensus estimates were looking for a reading of .9 percent.
Consumer Sentiment was recently released and showed a reading of 94.7 pointing to ongoing optimism about economic conditions and specially the labor market.
Fed Chairwoman Janet Yellen will be giving a speech and receiving an award from Harvard University later today. With ongoing discussion about the timing and pace of further interest rate hikes, investors may pay attention to any comments the Chairwoman makes regarding rates or economic conditions.
Outside Markets: Stocks are trading slightly higher in early trade today as some pre-weekend buying may be taking place following recent strength seen in equities. The broad market SP500 is within striking distance of previous all time highs, and a significant test in equities may be seen in the near future. So far, stock investors do not appear overly concerned about the potential for a June rate hike. That can change quickly, however, if or when another hike does in fact take place.
The crude oil market is slightly lower today and remains near the psychologically important $50 per barrel level.
The dollar index is seeing some strength today and appears poised for further upside. Recent strength in the dollar is likely weighing on gold and silver, and further gains could potentially derail the rally seen in precious metals over the last several months.
The Big Picture: Markets may simply be in a holding pattern over the next couple weeks as the next FOMC meeting approaches. While gold has seen some weakness recently on the notion of a June hike, it is entirely plausible that if a hike does take place, the gold bulls may jump back into the market as the uncertainty is removed. In addition, even with a June hike, the pace of further hikes is likely to remain slow and gold investors may still look to buy based on the idea of rates remaining relatively low for some time to come.
