Golden Start To The Year
Today’s Spotlight Market
Gold futures had their best week in five months due to weakness in both the US Dollar and stock prices.? Last week?s weakness in the greenback culminated with the sharp sell-off after the Non-Farm Payrolls report on Friday.? The report showed the US economy adding 151,000 jobs in January, falling short of the consensus estimate of 190,000.? This underperforming number cast enough doubt on the economy that it shifted the interest rate outlook for traders.
Fundamentals
Gold futures have gotten a huge boost from the global equity sell-off since the beginning of the year, with China leading the way.? Traders may continue to look for safe instruments if the global equity rout continues.? The non-farm payroll data drastically reduced the likelihood of an interest rate increase in the March FOMC meeting.? This could mean a weaker US Dollar, which could be viewed as beneficial for Gold prices.? Inflation is really a non-factor at this point.? The lack of economic growth around the world means raw materials are largely well supplied.? Energy prices, which were the engine for inflation in the 2000s, have been extremely soft as well.? In fact, Europe and Japan are more concerned about deflation than inflation at this time.? Likewise, it seems as though supply and demand are on the back burner for metals traders at this time. Instead, traders may continue to focus on the defensive aspects in the near-term.
Technical Notes? – View Today’s Chart
Turning to the chart, we see the April Gold contract taking out resistance near the 1175.00 level and the near-term high of 1187.90.? This suggests a test of the 1225.00 level could be in the cards for the Gold market.? The market could consolidate or pull back in the near-term due to technically overbought levels.? The RSI indicator is currently near the 90.0 mark, meaning the market likely can be viewed as fairly overbought.
————————————————————————————————-
This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery times due to factors beyond our control. Derivatives involve substantial risk and are not appropriate for all investors. Please read the “Disclosure Statement for Futures and Options” prior to investing in futures or options. For investments using a straddle or strangle options strategy the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and other risks apply