Gold and Silver Forecast for December 29- January 2

The prices of gold and silver didn’t do much last week as gold inched down by 0.1% and silver rallied by 0.8%. This low volatility is likely to continue on the last week of 2014. There are still a couple of reports that will be released this week worth noticing including: U.S. and China’s manufacturing PMI, U.S. consumer confidence, EU monetary development, and U.S. pending home sales.. Here is an economic preview for December 29th to January 2nd, 2015:  

This week, the markets are likely to show little volume of trade that could result in little movement for gold and silver. But keep in mind that during the holiday season there could sudden spikes in volatility as was the case in the last Thanksgiving holiday when oil prices tumbled down.

The main reports to be released in the U.S. include consumer confidence and manufacturing PMI. These reports could move the U.S. dollar, which, in turn, may also indirectly impact the direction of gold and silver prices. The U.S Manufacturing PMI declined to 58.7 as of last month. It’s expected to fall again to 57.6.  The U.S Consumer Confidence index dropped to 88.7 in November; the current estimates are that the index will pick up to 94.6.

China’s manufacturing PMI reports (the official and HSBC’s) will be released this week as well. They are also forward guided so we could see if China’s monetary changes had any impact on its economy. China is the leading importer of gold and silver and the progress of its economy could play a role in the movement of these metals’ prices.

By the end of the previous week, gold holdings in the GLD ETF declined to 712.302 tons– a 1.7% drop; it’s also 7.8% lower than its levels recorded at end of September.

Takeaway

Gold and silver are heading towards another volatile year that is likely, based on the current information and expectations, to result in another fall in gold and silver prices. The main issues to consider looking forward are the FOMC’s policy, the changes in market expectations about inflation, U.S. dollar progress against leading currencies and long term treasuries yields. For now, these factors don’t seem to play in favor for precious metals in 2015.

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