The gold market is down sharply in early action Monday. Spot prices are down about $23 per ounce in the early going as some investors book profits following gold’s recent run higher. The chart consolidation being seen this morning is not only completely normal but may also be necessary before the metal can sustain another leg higher. The market has lost the $2,000 level this far, however, it could prove to make things more challenging for the bulls.
Key outside markets today are seeing the Dollar Index firmer. Crude oil prices are steady at just under $81 per barrel and the 10-year Treasury is yielding 3.383%. The only market possibly having an impact on gold today is the dollar. The currency may see renewed pressure in the coming days and weeks, however, if talk about China and other nations moving away from it continues.
Although many investors likely took Friday off for the Easter Holiday Weekend, the markets did get the latest release on non-farm payroll data. It showed a rise of 236,000 jobs versus the February gain of 311,000 jobs. The gain on Friday still falls into the camp of the policy hawks, however, and could give the Fed more reason to consider hiking rates even further.
The market may be fairly quiet until the major data point of the week on Wednesday. That day will bring the release of the latest Consumer Price Index (CPI). for March. It is expected to show a rise of 5.1% versus a rise of 6.0% for February. A big miss in this report Wednesday could be market moving. If inflation is hotter than expected, it may reinforce the notion that the Fed has more work to do on rates and that rates will be moving higher yet. If the data shows slower-than-expected inflation, it may boost hopes for the Fed being done or even reversing course on interest rates sooner rather than later.
As worries over a recession increase, inflation and other data become even more important. The data stream will be closely scrutinized by the investing public in the months to come. Better-than-expected data may no longer be viewed as being hawkish, and markets may celebrate good news as being actually “good news.” Major misses in the data may pose a greater risk of recession, however, and could give investors reason to flee stocks and risk assets. Of course, there are also geopolitical risks being seen around the world now also.