Last week gold and silver prices started off the same way they have shifted during the last couple of weeks with little movement until Friday when both precious metals rates (mainly gold) spiked. The disappointing U.S employment figures were the obvious catalyst for this sharp gain for both metals on Friday. This news may have rekindled the speculation regarding the possibility of the Fed introducing another quantitative easing program. If there will be another QE program it could reheat the current stagnate bullion market and drive prices up again. I’m not sure the current economic situation warrants another QE program. The upcoming FOMC meeting at the end of June might affect this sentiment if the tone of the FOMC will change from the previous meetings.
This upcoming week there are several events and reports on the agenda that may affect gold and silver prices. The main events will revolve around Bernanke’s speech, ECB rate decision and U.S trade balance report.
Here is a short overview and an outlook for June 4th to June 8th; this includes a short description with a fundamental analysis of the main news, publications, and public speeches that may influence bullion traders.
Gold price edged down during the first few days of the week but spiked on Friday. During last week it rose by 3.24%; Silver increased on a weekly scale by 0.44%.
In Europe there is still a lot of speculation around the future of Greece. I have examined the potential ramifications on gold price if Greece will exit the EU. There are also growing concerns for the debt crisis in Spain.
The Euro traded down again against the U.S dollar by 0.66% (on a weekly scale); furthermore, other “risk” currencies such as the Australian dollar and Canadian dollar also depreciated against the U.S dollar by 0.59% and 1.14%, respectively. The ongoing fall in the Euro/USD and AUD/USD may have been among the factors to pull down gold and silver during the first few days of the week.
The video below presents a broad overview of the main publications and events that may affect gold and silver prices between June 4th and June 8th. Some of these reports and events include: Bernanke’s testimony in the Senate, U.S non- manufacturing PMI, ECB rate decision, China’s CPI, Canada, Australia and GB monetary policy and rate decisions and U.S. jobless claims weekly update (just to name a few).
In conclusion, I speculate precious metals might continue to rally during the week if the speculation around another Fed intervention will continue. The upcoming U.S reports including the trade balance report and non- manufacturing PMI affect not only the USD, but also gold and silver prices: if the U.S reports will continue to be negative or won’t meet expectations this could further push up precious metals. If Bernanke will hint of a shift in the economic projections of the Fed and better yet hint of a possible intervention in the markets by the Fed it could positively affect bullion rates. I still think eventually the Fed won’t budge from its current policy and thus the bullion market will become stagnate again.
On the other hand the developments in Europe including Greece, and Spain could further drag down the Euro, which could consequently also adversely affect gold and silver. Finally the developments in Asia including India and China could also adversely affect bullion rates as long as these countries’ economic progress will continue to slowdown.
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