The Week Ahead In Gold

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Although the gold market ended last week on a positive note, the bulls have their work cut out for them undoing the recent chart damage inflicted on the yellow metal in the aftermath of the surprising Donald Trump election victory in early November.

 

That being said, the precious metals are showing some signs of bottoming, and thus far the bears have not been able to push prices beyond the recent low prints.

 

Friday’s Employment Situation Report was not exactly stellar. The U.S. Department of Labor reported that non-farm payrolls saw 178,000 jobs created in November while the unemployment rate ticked lower to 4.6 percent.

 

October jobs data was revised lower, while September jobs data was revised higher. Of particular note is the downtick in the unemployment rate. While at first glance this figure seems encouraging, it can also be misleading. A decline in the participation rate was reportedly the driver behind the lower rate, not faster job growth.

 

All things being equal, this latest jobs report will likely keep the Fed on track for an interest rate hike at its next meeting later this month.

 

Investors may now turn their attention to the pace of future rate hikes from the central bank.

 

Markets are now pricing in two additional interest rate hikes in 2017, a forecast that could change rapidly if the data stream shows further strength. For the time being, however, the data stream continues to show some mixed signals, and the Fed is likely to stick with a very gradual approach as it looks to normalize monetary policy.

 

Key markets that can have a direct effect on the gold market including stocks, treasuries and the dollar index have all seen strong moves in the last three weeks. Those moves could, however, be coming to an end, at least in the short-term.

 

Some analysts have been suggesting that the equity rally has been overblown, and that a pullback in stocks is becoming more likely. Likewise, some believe that the sharp move lower in treasuries has also been overextended, and that a reversal is likely.

 

Markets have been moving on the notion of stronger economic growth driven by tax cuts and increased government spending. Interest rates have been moving based on the idea that Trump is more of a hawk than a dove, and that his plans are likely to fuel inflation.

 

At this point, all of this could be considered conjecture, and sentiment among investors has the potential to change quickly if some of the key policies recently discussed are not able to be implemented.

 

Investors will also not likely forget that much of the world remains engaged in ultra-low rate policies and quantitative easing. Even if the U.S. economy gains further steam, the global economy may remain sluggish and see weak growth for some time to come.

 

Gold may already be in the process of forming a meaningful bottom, and some analysts have already suggested significantly higher gold prices by the end of the year. Of course, much remains to be seen, but long-term investors are likely to remain focused on the potential benefits of gold ownership and come to the conclusion that many of the reasons for buying gold in recent years still exist today.

 

Those same investors could then potentially view current gold prices as a substantial bargain, and increasing demand could send the yellow metal higher once again. 

The Week Ahead In Gold

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With gold trading below the $1200 level and silver approaching $16 per ounce, this could potentially prove to be a significant buying opportunity for the long-term investor.

 

Could gold and silver go even lower? Sure-anything is possible. It would seem to us, however, that the recent price action in these precious metals has been overdone (which might be said of many key markets since the surprising Trump Presidential victory) and that at some point markets may find more of an equilibrium. That being said, however, we believe that lower prices should be welcomed by investors with open arms.

 

For the time being, optimism over Trump’s plans has fueled stronger equity markets and a stronger dollar while driving down interest rates and demand for perceived safe haven assets such as gold and silver. Whether or not the recent rally is truly sustainable is another question entirely, and some analysts are now calling for a pullback in stocks.

 

It would not be surprising, however, to see this rally in risk assets continue into the New Year. Donald Trump does not take office until Friday, January 20th-nearly two months from now. While talk of his plans and economic agenda has spurred equity buying and a stronger dollar, right now that’s all it is-talk. Once Mr. Trump takes office, time will tell if he is able to implement many of his plans. While Trump has spoken of a broad tax cut and increased fiscal spending, it remains unclear exactly how he plans to accomplish this.

 

The recent events in India may also play a key role in gold’s near-term fortunes. India recently banned both the 500 and 1000 rupee notes in an effort to crackdown on black money, and now there is discussion of a gold import ban in the country. According to some reports, India imports about 700 tons of gold each year-a massive quantity. If there is in fact a ban put on imports, the gold market could potentially see quite a shock, in fact, some are already comparing such a move to Nixon taking the dollar off of the gold standard.

 

Of course, whether or not such a move materializes remains to be seen, but you certainly have to consider the possibility that a potential Indian gold import ban may be one of the forces behind the recent selling in gold.

 

With a possible Santa Clause rally being seen in stocks over the next several weeks, gold and silver may remain on the defensive for the remainder of the year. That being said, however, these metals may be getting close to finding a bottom, and it would not be surprising to see that bottom coinciding with the Fed lifting rates next month. Fed Funds futures are now pricing in a 100 percent chance of a rate hike by the central bank at its next meeting. The next hike could potentially become a case of sell the rumor buy the fact for gold and silver. 

A Brief Honeymoon

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Unfortunately, what is being lost in the debate over the last two weeks over President-Elect Donald Trump is not how, but why. Dialogue has been focused on questions of whether a segment of America is inherently racist or sexist or many other non-complimentary labels. Barring the merits of the previous conversation, as it’s certainly a discussion worth having over an increasing intolerance of immigration during periods of low economic growth, it is also escaping from the reality that is being witnessed across the western world and that is the momentum gain of what would previously have been called fringe parties or candidates. The debate has to be shifted to why, because if anyone thinks Donald Trump is the finale of all this change, they will be just as shocked by the next mainstream media surprise headline.

 

The debate has already begun over the economic realities of Trump’s America. As discussed last week, the market reaction to the President-Elect was extremely positive, with the Dow Jones Industrial Average continuing to take on new highs over the last five days. Whether this has been attributable to actual perceived positive economic benefits of the incoming administration or the reaction to inflationary domestic policies triggering a selloff in the bond market and a rotation for investors into equities is up for debate.

 

Renowned bond investor Bill Gross argued in his latest commentary that all policies from the Trump economic platform are more capital favoring than that for labour. Meaning the tax reform and repatriation discussed will do little for spurring economic growth in an economy that otherwise lacks growing business investment. Furthermore, it will add to a trend that we’ve been watching with US corporations, which is returning cash to shareholders through dividends and share repurchases further exacerbating the divide between Main Street and Wall Street.

 

Additionally, notable Canadian economist David Rosenberg with Gluskin Sheff goes further to look at the idea of personal income tax cuts, and suggest they will be too marginal and insignificant on the majority of the population that actually has the ability to consume more. He too saves his excitement.

 

And for as many headlines the US election has demanded, we still live in a global world. Shifting overseas we’re closely watching the Brexit negotiations. Not for the factor that they are leaving as that has been settled, but the pressure it is mounting on an increasingly divided European Union. We have upcoming elections in France, Italy, and Austria, and everyone is looking to France for the next ‘Brexit’ or ‘Trump’ moment with the growing popularity of National Front Party Leader Marine Le Pen. As many seem to be suggesting we are looking at a lone Europe as they potentially lose an ally as the US become more nationalistic focused. Thus, the threat of a break up in the euro could be as high as it’s ever been.

 

From the aforementioned synopsis of what may be thought of as global superpowers, it’s difficult to find a takeaway for the markets when they seem so overly consumed with short term and transitory factors. Of significance is the fact the US dollar index, the greenback measured against a basket of major currencies climbed steadily this week. Amidst all this economic uncertainty we’ve seen gold break key support at $1,250 US and trend lower. Despite a supported physical market, gold ETF’s are seeing outflows reversing an accumulation trend earlier in the year. In all likelihood, we have to get past the US Fed raising rates, but we seem to be of the view that this Trump Honeymoon will be short-lived.

The Week Ahead In Gold

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The gold market ended last week near key support at the $1200 level, and thus far the gold bulls have not been able to really stop the bleeding. The market may potentially find some chart support just below $1200 in the $1196-$1198 area, although a decisive breach below this level could potentially see a fresh leg lower in price.

 

Looking at gold as a long-term investment (the view we believe should be taken), the market may potentially provide some significant buying opportunities at current levels or if prices decline further.

 

It is important to keep in mind that markets have been moving since the U.S. Presidential election based on the notion of significant changes in economic and possibly even monetary policies. None of these changes has, however, been put into practice yet, and some of them may be very challenging to implement.

 

Although the idea of increased government spending and lower taxes sounds great on the surface, some analysts have suggested that putting such a plan into action may be extremely difficult. Of course, precisely how Mr. Trump plans on accomplishing such objectives also remains quite unclear, as little if any specifics have been divulged at this point.

 

Some might consider recent market action euphoric, and some analysts have already been discussing the possibility of the stock rally and treasury sell off being overblown.

 

Time will tell…

 

The rally in the U.S. Dollar Index is a whole nother story. The greenback has been on a tear higher, moving up as investors consider the potential ramifications of a Trump Presidency including protectionism, significant changes in trade, higher interest rates and more.

 

The dollar recently broke out above the upper end of its recent multi-year trading range, and is currently trading at levels not seen since the early 2000s.

 

It seems for all practical purposes that the dollar will continue to move towards parity with the euro, while also gaining against some other key currencies. The question is: Is the recent run higher in the dollar sustainable?  The dollar may continue to move higher until more clarity is seen on Trump’s economic plans, and if some of these key plans currently being discussed are not able to be implemented, the dollar could potentially see a major reversal.

 

For the time being, however, it is difficult to imagine a major rally in gold or precious metals if the dollar continues its recent ascent.

 

Interest rates are another key theme that investors will be paying close attention to. Trump is considered by some to be far more hawkish, and investors seem to be speculating on a faster pace of rate increases. Fed Funds futures currently point to about a 90 percent chance the central bank will tighten in December, although this hike appears to have been fully discounted by markets at this point.

 

In fact, with the recent bond sell off, rates have risen sharply in the last several sessions, and it would seem that a lot of the heavy lifting has already been done for the Fed.

 

Some analysts still expect the overall pace of additional rate hikes to remain slow and incremental, as the Fed will likely want to avoid smothering the economic embers currently burning.

 

For now, gold and silver may potentially remain on the defensive. That being said, however, markets have a funny way of sucking as many investors into one side of a trade as possible before turning sharply the other way. The more bearish sentiment becomes surrounding gold and silver, the better the likelihood that these metals have found a significant bottom. 

What Next?

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It’s worthwhile to take a measured second look at what has been an absolutely wild week for the markets. Between the lows of Tuesday night in the overnight futures market, and the closing trade on Wednesday, we witnessed the Dow Jones Industrial Average in a range of 1000 points. What started was an initial selloff with Dow futures downs about 800 points to then rally and finish the day within double digit points of its all-time high. With that kind of market volatility, one would expect that catalyst to have been a definitive act from the US Federal Reserve indicating or making a change in interest rate policy, or federal stimulus unveiled by the US Federal government, but instead just an acceptance speech from the President-Elect, Donald Trump with hints to infrastructure spending and the more positive campaign promises that has investors reacting quickly and with their wallets to his pronouncements.

 

This will be the guessing game between now and the inauguration, and no doubt will contribute to more market volatility, but a modicum of rationality might be needed away from all this excitement to question how much change we may actually see, and what implications it has for the markets.

 

The Republican Party will have control of all three levels of government in the US, but how quickly they will act and give President-Elect Trump a mandate is at this point up in the air. Certainly the idea of corporate tax reform, a tax holiday for repatriating overseas earnings, and a dose of infrastructure spending are all positive to economic growth. On the other hand, it’s hard to quickly forget the uncertainty created by the protectionist rhetoric discussed over the course of the campaign, whether it was NAFTA and trade with Mexico, or slapping tariffs on Chinese goods in attempt to deflate the United States trade deficit with China. As Nouriel Roubini highlights in a recent post, tough talk on China carries the populist appeal, but is quickly realized once in office that it’s a zero sum game.

 

Similarly, with NAFTA, it does not seem like Trump would enter into scenario where he may cut off his nose to spite his face. As was a great pain for enlightened watchers throughout the campaign, the way in which the North America Free Trade Agreement was discussed illustrated how little understanding there was of the pact. As we’ve learnt, the threat of Trump pulling out of NAFTA could very much be possible by providing 6-month notification to Congress, but the ramifications of that makes it far less probable. An article in this Thursday’s Wall Street Journal debunks the “made in America,” idea of US automobiles and how the assembly is as much a story of parts travelling back and forth cross-border in the process. This is the essence in his team trying shift the conversation from being against free trade to promoting fairer trade.

 

Finally, we have to question whether it seems rational for the markets to be as overzealous as they are. A lot of the rally last week is certainly attributable to financials and anticipation that interest rates will be moving higher in December, and potentially soon after even more so with the inflationary policies proposed by Trump. Furthermore, it was further buoyed by the idea that the lax regulatory wing of the Republican Party would look to repeal Dodd-Frank and other measures that have tightened the grip on Wall Street. Our take is that if this were a government that were to accomplish anything, it will be in accordance with the slow moving pace of Washington, and very much in accordance with the marginally right of center but a divisive congress, and a filibuster prone senate.

 

As has been our view leading up to the election, the rhetoric created an opportunity for a lot of ‘noise,’ but whoever was to be elected does not change the dynamics of the global economy. As so many try to explain the phenomenon of Trump, former Pimco CEO Mohammed El-Erian explains it most prophetically by stating that low growth economic environments create civil unrest and prompt political change. The surprise outcome of the US shock should not surprise us any more than elections in Greece, Egypt, and Britain, including Brexit, and the list goes on. Trump will be a distraction, and justifiably an upsetting one for a number of people, but the current environment of a struggling debt burdened global economy has not changed, and for certain the alternative to President-elect Trump; albeit more tolerable to some, obviously wasn’t the answer.

The Week Ahead In Gold

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With solid weakness in Friday’s session to finish the week on a sour note, gold could see additional selling pressure before finding more solid footing. The yellow metal declined over $100 per ounce from the highs seen Tuesday night to the lows seen on Friday.

 

Gold did pretty much the exact opposite of what many had expected should Donald Trump somehow pull off an upset victory. That being said, however, financial markets may take some time to really sort things out. Markets could potentially experience an ongoing period of heightened volatility as more clarity is provided regarding Mr. Trump’s plans for the country and the economy.

 

This week, investors will monitor many of the usual key data points. MBA Mortgage Applications, Weekly Jobless Claims, PPI, Housing Starts, Leading Indicators and more are set for release. In addition, there are several Fed officials speaking throughout the week at various engagements.

 

The focus, however, will likely remain on Trump and his plans for the future. The notion of protectionism and significant changes in immigration policy as well as the potential for swelling federal budget deficits could keep investors on their toes, and markets on edge.

 

To say that there is a great deal of uncertainty right now would be an understatement, and markets will be looking for a lot more clarity on key issues than what they have seen thus far.

 

Given the amount of unknowns right now, some have called into question whether the Fed will in fact look to lift rates next month. Although Fed Funds futures still point to a strong likelihood of a December hike from the central bank, the Fed could possibly hold off if market volatility continues, just as it did during the summer of 2015 as Chinese market volatility spread and just as it did following the historic Brexit referendum back in June.

 

The Fed itself is a whole nother story, as Trump has been critical of the central bank and its Chairwoman Janet Yellen.

 

Gold may have further downside to go, but hopefully you have kept some powder dry as lower gold prices could potentially present an excellent long-term buying opportunity. Although gold and other perceived safe haven assets have been hit hard in recent days, the euphoria over the possibility of massive infrastructure spending could fade-especially if investors begin to focus more on how such spending would impact federal deficits and potentially stoke inflation.

 

The bond market appears to be telling us that a December rate hike from the Fed is a near-certainty, as yields have spiked this week. The pace of further hikes, however, remains unclear. On one hand, some analysts believe Trump to be more hawkish, while some argue that his policies could potentially drive the economy into recession.

 

Time will tell as Trump’s plans are unveiled and put into action. For the time being, gold may actually begin to stabilize and rally after the Fed hikes in December. In our opinion, $1200 per ounce gold or even lower prices are likely to attract significant buying interest. With a long-term time horizon in mind, adding to gold holdings around current price levels could potentially prove to be an excellent value.

The Week Ahead In Gold

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Tick tock tick tock tick tock…  The clock is quickly winding down to the U.S. Presidential election, and right now it appears to be a dead heat. Republican candidate and businessman Donald Trump has closed the gap between himself and Democratic candidate Hillary Clinton, with at least one pole recently putting Trump ahead in the race.

 

The bottom line? This thing could go either way right now…

 

Markets have remained relatively calm and subdued ahead of the highly anticipated election, although nerves may become considerably more frayed in the coming days. Investors may potentially seek refuge in perceived safe haven assets early next week, and gold and silver could potentially attract significant buying interest.

 

Some analysts have suggested that the Presidential vote could be akin to the Brexit vote seen back in June. Following the U.K.’s decision to leave the European Union, markets were hit hard, with equities as well as commercial commodities being heavily sold off.

 

The world, however, did not end.

 

Markets proceeded to bounce back, with stocks rebounding strongly and achieving new all-time highs in the process. Commodities recovered as well, and within a few weeks it was almost as if nothing had happened at all.

 

Will this election provide a similar scenario?

 

Possibly, but there are some major differences. A Trump victory could bring with it a significant amount of uncertainty as some analysts have questioned his policies and cited a lack of detail on how he plans to accomplish some of his goals.

 

On the other hand, a Clinton victory brings with it its own set of uncertainties, such as whether or not the email server issues that have been the topic of so much discussion are finally put to bed.

 

What if Clinton wins, but the election results are disputed? Then what?

 

Although many articles in financial media have discussed the idea of sharply higher gold if Trump does in fact pull off a victory, we believe that a strong case can be made for gold to go sharply higher regardless of who wins the race.

 

It seems like a long time ago now that investors were strictly focused on the Fed and the potential timing of the next interest rate hike. Friday’s U.S.  jobs data was considered to be another indication that the Fed will hike in December.

 

Now that the timing of the next rate hike appears to be a foregone conclusion, investors will begin to turn their attention elsewhere. Stocks have appeared much shakier in recent action, and some analysts have been calling a top in equities. Weaker crude oil seen in recent days could potentially exacerbate any stock weakness.

 

The dollar index may also remain at the forefront of investor attention. A stronger greenback has likely been a significant factor in gold’s lack of sustainable upside in recent weeks, although the dollar has been showing some signs of fatigue.

 

Gold will once again try to maintain trade above the $1300 per ounce level with a close above that on Friday. Investor anxiety over the election and its results as well as potentially weaker stocks and a weaker dollar could provide the gold bulls with enough ammunition to take prices to higher, yet sustainable levels. 

The Week Ahead In Gold

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The idea of gold and precious metals lacking any fresh, bullish catalyst has been an ongoing theme for some time now. Could that be about to change?

 

Last week, the announcement by FBI Director James Comey that the bureau was reopening the email investigation of Presidential candidate Hillary Clinton caused quite a stir among lawmakers and politicians. Markets even took notice, with gold catching a bid on the news.

 

This revelation comes just days before the highly anticipated U.S. Presidential election, and could potentially have an impact on the results.

 

Needless to say, this election brings with it a large amount of uncertainty. The country seems very divided, and there appears to be very little, if any, common ground between the two candidates.

 

Some analysts have voiced concerns over a potential Donald Trump victory. It seems that many people feel Trump has not done enough in terms of detailing exactly how he plans to accomplish some of the policies he has suggested. Many apparently view a Trump victory as a significant risk to not only the country’s geopolitical standing but to its economy as well.

 

A Clinton victory, on the other hand, could bring with it its own degree of uncertainty. The latest news that the investigation into her emails has been reopened may only further add to investor anxiety. And what if Mr. Trump is unwilling to accept a Clinton victory? What if the shift in power does not go as smoothly as planned?

 

The bottom line? It may be an interesting few days as the election quickly approaches.

 

Although markets may be content at this point simply trading sideways until the election has come and gone, the potential for increasing market volatility does exist.

 

Should investors become more nervous (as has already been evident by a rising VIX), gold and other perceived safe haven assets could potentially see additional buying interest.

 

Gold may have to contend with a rising dollar, however…

 

While it is widely expected that the Fed will take no action at its November meeting, odds of a December interest rate hike look pretty good at this point.

 

The dollar has been steadily rising on the notion of rising U.S. rates, and the sinking Great British Pound has also fueled buying in the greenback. The dollar is nearing the top end of its two year trading range, and a breakout above the 2015 highs near 101 on the dollar index could potentially see a fresh leg higher in the currency.

 

Such a move could act as another significant drag on higher gold prices, especially if gold remains lacking any fresh, bullish inputs.

 

Once the smoke clears from the U.S. election, gold and other markets may show their hands for the rest of the year, and start making more sustainable directional moves.

 

Although gold has had an impressive 2016, the market remains vulnerable to further selling pressure in the absence of any significant upside. That being said, however, a fresh leg lower could potentially be the final down move before the yellow metal finds more solid long-term footing. 

The Week Ahead In Gold

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After seeing some significant downside in recent action, the gold market is trying to find some stable footing once again. The gold bulls showed some signs of life this past week as prices staged an upside breakout from recent sideways action, however, the follow through on that breakout has not been much to write home about thus far.

 

Unless a solid push higher in prices is seen this week, the gold market may once again find itself on the defensive.

 

The gold market finds itself in a peculiar place currently, having several issues potentially working for and against it. Although the notion of higher interest rates has weighed on gold in recent weeks, the idea of extremely slow and incremental hikes in the Fed Funds rate could still be considered bullish for the yellow metal. Not only that, but some of the recent data released is less than stellar, prompting some analysts to speculate that the Fed will in fact not raise rates in December and will remain on hold until sometime next year.

 

Higher global equity markets have also likely weighed on gold. The broad market S&P 500 remains not far from recent all-time highs, yet has been unable to make a new high for some time now. In fact, the longer the market remains close to previous highs without any attempts at a fresh high, the more potentially volatile price action may get if the market starts to break down.

 

Perhaps the biggest factor weighing on gold in recent weeks has been the strength seen in the U.S. dollar. The greenback has been on the rise and is currently trading at levels not seen since last March. Looking at the larger timeframe, the dollar index is approaching the 100 level, and along with it the top of a five year trading range.

 

The combination of possibly higher rates and a sinking Great British Pound are likely the primary drivers of current dollar upside, and the greenback could have further room to run. An upside breakout of the recent five year trading range could potentially see the dollar move significantly higher, and could potentially fuel selling in gold, silver and other dollar-denominated commodities.

 

Of course, all of these potentially bearish issues for gold could turn on a dime. With a very busy string of economic data coming up this week, things could get interesting.

 

Investors will get the latest readings on several key pieces of economic information this week including Consumer Confidence, New Home Sales, GDP, Weekly Jobless Claims, PMI Manufacturing Index, Durable Goods Orders and more.

 

All of these key data points have the potential to be market-moving, and any significant misses in this data could potentially fuel fresh speculation on the likelihood of a December interest rate hike. Such speculation could have a large impact on equity, interest rate and currency markets.

 

Gold has been lacking any fresh bullish catalyst for some time now. That being said, however, it seems that several factors could be coming into play in the near future that could potentially drive gold sharply higher. If gold is not able to sustain a rally from current levels, we would expect another wave of selling to push prices lower-and represent an excellent buying opportunity for the long-term investor. 

The Week Ahead In Gold

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To say the past trading week for gold was uneventful would be an understatement. The yellow metal traded in a very tight range as the bulls continue to try to find reasons to buy. The bears, on the other hand, are likely looking at a stronger dollar index and impending interest rate hike as reasons to sell.

 

The dollar index has seen strength in recent action as the British Pound continues to decline. The potential for a “hard” Brexit appears to be sinking in at this point, and the dollar could see some ongoing support if the pound keeps falling.

 

Speaking of interest rate hikes, Fed Chairwoman Janet Yellen spoke on Friday, and while she did not directly address the current economic scenario or the likelihood of a December interest rate hike by the central bank, her commentary was considered to be dovish by some analysts.

 

What might this mean for gold and precious metals?

 

The fact that Ms. Yellen appears to be maintaining a dovish bias could potentially set a lower baseline for future rate increases. Perhaps such a tone could be indicative of a very slow pace of hikes, with only one or two hikes being seen over the next year.

 

Interestingly, this comes at a time when some are hoping the Fed raises rates-and soon-so they will be able to lower them again once the next recession hits.

 

Billionaire investor Wilbur Ross sees a recession coming down the pike within the next 18 months, and fears the Fed will lack the ammunition necessary to fight it. In an interview with Marketwatch.com, Mr. Ross stated: “The Fed’s toolbox is basically empty. They need to replenish that toolbox in order to have a way to help, if and when we get into this recession that I see in the next 18 months or so.”

 

Make no mistake, this is not a call to raise rates because the economy is doing great, but rather it is a strategic call to hike rates before the next downturn hits.

 

Such a scenario could potentially be bullish for gold, silver and other perceived safe haven assets. Much has been made of the possibility of a rate hike from the Fed this year, although in the grand scheme of things, how big of a deal is a 25 basis point hike?

 

Gold could potentially find support near current levels, although the possibility for more downside does exist. The stronger dollar and idea of a December interest rate hike by the central bank may weigh on gold for the time being, but the yellow metal may find plenty of buyers once the next hike does occur.

 

For the time being, gold may find itself in somewhat of a holding pattern. Investors will continue to monitor the data stream very closely, although at this point a December hike looks like a foregone conclusion. The gold bulls will also likely welcome any potentially bullish catalyst. Some recent concerns over Deutsche Bank and the Chinese economy could make headlines again, and could potentially fuel a rally in gold and perceived safe haven assets while driving selling in stocks and risk assets.