U.S. markets are closed Monday this week in observance of the Memorial Day Holiday. Traders and investors will be back in full swing on Tuesday, however, as the rest of the week is packed with key economic data.

 

Key economic reports set for release this week include Consumer Confidence, Dallas Fed Manufacturing, ADP Employment, GDP, Weekly Jobless Claims, ISM Manufacturing, Construction Spending and more. The biggest data point will likely be Friday’s jobs report for May. Consensus estimates see 185,000 jobs added with the unemployment rate steady at 3.9%.

 

The Fed is set to hike interest rates again in June, and only a significant miss in the jobs report could potentially give the central bank reason to reconsider another move in the weeks ahead.

 

The Central Banks recent commentary was viewed by many analysts as being a bit more on the dovish side of the ledger, even though the central bank looks likely to hike rates four times this year rather than the previously anticipated three. Comments by some Fed officials seems to suggest that the central bank could be close to reaching an equilibrium-the point at which rates are neither overly expansionary nor overly constricting-and the high point seen in the current rate cycle could be reached sooner than expected.

 

In addition to the data stream this week, investors will be on the lookout for any new developments on the geopolitical front. The cancellation of the U.S./North Korean summit seemed to bring back a bit of the safe haven bid, although it is now looking increasingly likely that the summit may be back on at some point. Without any fresh, bullish geopolitical catalysts, the gold market may simply look to tread water.

 

Recent data from the CFTC showed that net long positions have declined to a 10-month low. Although this data may appear bearish at first glance, it is often used as a contrarian indicator. With relatively few longs in the market currently, any bullish developments could attract a significant amount of buying interest and potentially fuel a sharp and significant price rise.

 

With so much data set for release this week, the dollar index could also be watched closely. The strength seen in the dollar in recent weeks has played a major role in gold’s lack of upside, and further gains could weigh on prices further. On the other hand, any significant misses in key data points could let some of the wind out of the dollar’s sales, and this could reinvigorate the gold bulls.

 

Not only could domestic data fuel price action in the dollar this week, buy fresh developments in Italy could also potentially impact the dollar and the euro. Italy’s president has set the country on a path towards fresh elections, and these elections could determine the country’s place in the EU going forward. With some of the anti-establishment parties gaining more traction, financial markets may become increasingly nervous as elections approach in the second half of the year.

 

The potential for Italy to leave the EU could present a very complex problem for EU policy-makers as they look to wind down there QE program in September. As has already been seen before with Greece, any major problems in the EU or the notion of the union breaking apart could fuel significant risk aversion and a flight to perceived safety assets.