Gold prices have continued to decline after an initial test of resistance at support-turned-resistance. Price action is testing support at the $1100 figure. Lackluster inflation expectations remain the driving catalyst after the spread between 10-year Treasuries and TIPS (Treasury Inflation Protected Securities) narrowed to 2.21 percentage points.
With many uncertainties in the currency market, the Greenback could start to range trade. Very low volatility is expected in the week ahead on the currency side of things. This could translate into a slow week of sideways trading in commodities and precious metals. Meaning that very little would be expected in Gold price action.
The economic calendar is uneventful until Wednesday, when the US Durable Goods report is scheduled to be released. An uptick of .5% is expected any better than expect release could insight a renewed confidence in the greenback and a spike High in the currency market. This could increase the selling pressure on Gold Prices.
Also of high importance this week is the USD Gross Domestic Product for the 4th quarter. This report will be issued mid-day Friday, and is expected to stay unchanged at 5.9%. As with the US Durable Goods report any significant changes from forecast can trigger strong volatility in the currency markets. That volatility usually trickles over to commodities shortly thereafter.
$1100 has been providing strong support for Gold Prices, and without a strong change in fundamentals, and additional selling pressure, it well hold.
Ronald Stevens
