Gold Starts Week On Sour Note
Today’s Spotlight Market
Gold futures got off to a slow start to the week amid the global rally in equity markets, lessening the defensive demand for the metal.? Gold futures have been a bit weak after spiking 2 weeks ago during the sharp global sell-off in equities.? The metal has plenty of fundamental question marks, suggesting trading could be driven by emotion and the precious metal market could be rather reactive to news.? Economic news has been extremely choppy the past several weeks, which has contributed to price volatility.
Fundamentals
Friday?s non-farm payroll report failed to provide much clarity on whether or not the Federal Reserve will raise interest rates later this month.? The report gave further evidence that the US economy continues to add jobs, but the figure itself disappointed some traders.? An exceptionally strong report would have made the rate hike all but a slam dunk, but Friday?s data was encouraging rather than outstanding.? China reported its trade balance last night, which showed the gap between exports and imports widening to $60.24 billion in August, up from $43.03 billion in July.? While this may have irked some traders due to the volatility, the trade balance far exceeded expectations of $48.20 billion.? At the very least, the huge jump in the trade surplus could give currency traders a bit of a reprieve, as it would make it highly unlikely the People?s Bank of China will devalue the Yuan again in the near-term.? This may bolster the US Dollar and, in turn, could have a negative impact on Gold prices.? There are still plenty of economic questions facing large economies around the globe, but there may be a lessened sense of panic among traders.? Slow growth and possibly higher interest rates in the US do not bode well for Gold as an inflation hedge.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the December Gold contract failing to garner any sort of upward momentum.? Prices stalled near the 1175.00 level before falling back.? Prices may need to break through this level in order to gain some upward momentum.? On the downside, prices could be vulnerable if the December contract is unable to hold the 1080.00 level.
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