What To Watch In Gold In The Week Ahead

Rough times ahead would be a good thing for gold.

(SALEM, Ore.) - The week ahead is framed to be a very interesting one for gold bugs, with various economic reports coming that will likely set the pace for the movement in the price of the precious metal.

Good or bad, economic data tends to lead to wide swings in the price of gold due to the precious metal’s standing as a safe haven investment.

Key Economic Events To Pay Attention To

The US jobs report is a report that’s compiled by ADP and gives investors and economists a detailed overview of the workforce within the United States.

This report provides data with regard to how many jobs were added or lost during the month, the unemployment rate, and wages. Of course, economies that are doing well, see strong growth in job additions and wages while unemployment rates either fall or remain low.

Any data that suggest anything but this outcome acts as a negative indicator. Too many negative indicators could mean that there are rough times ahead, which would be a good thing for gold.

Another key event that takes place on Wednesday is the Mortgage Applications report. As the name of the report suggests, the MBA Mortgage Applications report gives investors and economists the growth or lack thereof in the amount of mortgage applications taking place in the United States.

This is a key indicator because it shows consumer sentiment with regard to economic growth. After all, if consumers don’t feel comfortable with the stability of the economy in which they live, they’re not likely to apply for a mortgage and tie themselves to long term payments.

Therefore, growth in mortgage applications is considered to be a strong signal while declines in mortgage applications is considered to be a negative signal.

Other Factors To Pay Attention To

Outside of economic data, it’s always a good idea to pay close attention to the core factors that tend to cause movement in the price of gold. These include:

• Stock Market Movement: As a safe haven investment, gold generally has an adverse relationship with the stock market. This means that when market conditions are positive, demand from investors is lackluster, leading to declines in the price of the commodity. Adversely, when market conditions are negative, investor demand increases, leading to gains in the value of gold.
• Supply: When discussing the movement in the price of gold, many seem to talk quite a bit about the demand side while omitting the supply side of the equation. At the moment, the global gold supply seems to be peaking out and many experts believe that there are going to be declining supplies of the precious metal ahead. So, any supply-related updates could lead to movement.
• Demand: Of course, demand should also be considered. While investor demand is always at the forefront of these conversations, it’s also important to consider jeweler and decorative demand. This is especially the case as the Indian wedding season nears.

The Key Is Following The Data

At the end of the day, the key to predicting price movement in gold, or any other commodity for that matter, is to follow the data. By paying close attention to the economic, market, and commodity specific data mentioned above, more educated predictions can be made with regard to the direction of the price of gold ahead.

Source: Salem-News.com Special Features Dept.