THE WEEK AHEAD IN GOLD – SEP 11, 2017

Written by Border Gold     September 11, 2017

Gold is seeing some selling pressure in early action Monday to begin the new trading week. A stronger dollar, quiet North Korea and weakening of Hurricane Irma are all likely fueling some increased appetite for risk as the new trading week gets under way.

For gold, a nice pullback with some back and fill trade may be a very good thing. Markets seldom move straight up or straight down, and when they do make such parabolic moves they rarely prove to be sustainable. Although gold may be taking a breather, the market remains firmly in “buy the dips” mode unless proven otherwise.

At this point, it seems it would take a lot to stand in the way of higher gold. A weaker dollar, geopolitics, government gridlock and a dovish Fed may all be playing a role in gold’s recent rise, and may continue to do so. Although the dollar may be seeing a bounce to start the week, the greenback remains in a firm downtrend that has the potential to see prices go lower, much lower.

The dollar would seem to be on very tedious ground here as fresh lows could trigger a much larger-scale sell-off. Looking at the bigger picture, there are not too many reasons to be bullish on the dollar right now. Yes, the Fed could potentially decide to raise rates again before the end of the year, and yes, the Fed may maintain the stance that further hikes will be coming. The pace and timing of additional hikes, however, is likely to remain extremely slow. In fact, if markets do start to get into trouble, you have to wonder if the Fed will not only avoid raising rates further but whether they could decide to start lowering rates again.

The dollar has seen quite a wild ride since Trump won the U.S. Presidency. After rallying hard, the dollar has been trending lower for some time now, moving below pre-election levels. This is likely due to not only a dovish Fed but also a lack of major legislation being passed (at least thus far). Hopes for major tax reforms and a massive fiscal spending package have dwindled, and unless significant progress is seen, the greenback could remain on the defensive.

This week, investors will get the latest inflation data in both CPI and PPI as well as retail sales and manufacturing data. While none of these reports are likely to have a significant impact on markets, slow inflation readings could potentially give the Fed more to think about regarding its rate hike plans.

The stock market will also likely be watched closely this week by investors as it is approaching its previous highs. Fresh all-time highs in stocks could potentially weigh on the gold market, while a failure near current levels in equities could also add fuel to the fire being seen in gold prices recently.

Gold is due for a pullback, and that pullback should be welcomed. Some back and fill price action will help gold make a more sustainable run higher, and any dips in the market are likely to be aggressively bought at this point.

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