During last week, gold and silver prices rose, mainly on Friday following Bernanke’s speech at Jackson Hole. Despite the recent rally of bullion prices, I still think it’s too early to expect another QE program. There were several other reports that were published during last week, including the pending home sales figures in the U.S, and the revised up U.S GDP for Q2 that many have had a modest impact on bullion rates. Here is a short forecast for September 3rd to 7th; this includes a fundamental analysis of the main publications and speeches that may affect precious metals markets including: Mario Draghi’s speech, U.S manufacturing PMI, MPC rate decision and purchase program, U.S non-farm payroll report, Canada’s rate decision, Australia’s GDP for Q2, ECB rate decision and U.S. jobless claims.
Gold price rose during last week by 0.88%; further, during said time the average rate reached $1,670.6 /t. oz which is 1.22% above the previous week’s average rate of $1,650.42 /t. oz. Gold finished at $1,687.6 /t. oz. Silver also increased on a weekly scale by 2.39%; further, the average rate increased by 3.91% to reach $30.98/t oz compared to the previous week’s average $29.82/t oz. Furthermore, during last week the SPDR Gold Shares (GLD) also rose by 1.4% and settled by August 31st at 164.22.
The Euro also rose against the U.S dollar by 0.53% (on a weekly scale); on the other hand, other “risk” currencies such as the Australian dollar depreciated against the U.S dollar by 0.8%. The rise of the Euro may have contributed to the recovery of precious metals rates. The correlation between the Euro/USD and precious metals remains robust: during August the correlation between Euro/USD and gold reached 0.5 and between AUD/USD and gold the correlation was 0.31. This means if the Euro will continue to appreciate it could pull up gold and silver during the upcoming week.
In the video below there is a broad overview of the main publications, speeches and decisions to be made that could affect gold and silver prices between September 3rd and September 7th. These include the above-mentioned news items such as: Mario Draghi’s speech, U.S manufacturing PMI, MPC rate decision and purchase program, U.S non-farm payroll report, Canada’s rate decision, Australia’s GDP for Q2, ECB rate decision and U.S. jobless claims (just to name a few).
In conclusion, I guess gold and silver prices will continue to rise on a weekly scale but at a lower pace then they did during the previous week. Following the hike in bullion rate on the last day of the week mainly due to Bernanke’s speech at Jackson Hole, there might be a correction, assuming all things equal, on the first day of the week. The bullion market might zigzag during the first few days of the week. The upcoming interest rate decisions by ECB, RBA, BOC and MPC could affect the forex markets in Europe, Australia, Canada and Great Britain, respectively. If any of these Central Banks will decide to cut the interest rates it could also affect the bullion market. The main report of the week will be the non-farm payroll report. If this report will show another substantial growth – say above 120k in jobs – this could rally the commodities and stocks markets.
There are several other reports that could affect precious metals rates: if the U.S manufacturing PMI will dwindle this could positively affect bullion rates. The ECB President’s speech at the beginning of the week could clear up some of the speculations around the future steps of ECB in the near future. Finally, if the Euro, Aussie dollar and other exchange rates will further appreciate against the USD, this could also pull up precious metals.
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