This week could prove to be a pivotal week for markets with the S&P again banging on the door of the 1850 record highs. Rhetoric in the press seems to covey an unwillingness for equity markets to push on through the major technical level & its likely without a catalyst, we will see equities pull back. Gold & equities have been trading higher in tandem of late, so it will be interesting to see if gold can stand on its own. Its unlikely the two would run in tandem for long & gold has been supported mainly due to a weakening USD which is probably a little over sold. Emerging Markets could again prove to be the catalyst for further strength with the Ukraine becoming a political hot potato with Russia injecting liquidity whilst the US is warning Russia that military action in the Ukraine will not be tolerated. The new regime in the Ukraine has openly stated they want to further their ties to Europe whilst having an equal 'neighborly' relationship with Russia. As previously mentioned the Emerging Markets particularly former USSR states & some South American states are creaking under the pressure of political instability, rampant debt & inflation. These types of issues should see gold well supported & imo its likely we will see a break of $1330 this week, with the next target being $1360. There is a host of data due out this week in the US to examine & none more important than Housing Starts & Consumer Confidence. The mostly weak recent data has been dismissed due to weather, however it won't be long before the market turns its focus to the impact this will have on Q1 corporate earnings. Cheers Daytr
