During last week gold and silver prices hiked after they had remained nearly unchanged during the first couple of weeks of August. The renewed expectations that the Fed will issue another stimulus plan in the near future were ignited following the minutes of the FOMC meeting. There were also speculations that the ECB will issue a bond purchase program. In the meantime there were other reports that may have had a modest effect on the bullion market such as the rise in American new home sales during July and the increase in U.S. jobless claims by 4k to 372k.
Here is a short forecast for August 27th to 31st; this includes a fundamental analysis of the main publications and speeches that may affect precious metals markets including: Bernanke’s speech, pending home sales, U.S consumer confidence report, U.S GDP for Q2, China’s manufacturing PMI, U.S factory orders, Canada’s GDP, ECB President Speech and U.S. jobless claims.
The price of gold rose during last week by 3.3%; further, during said time the average rate reached $1,650.42 /t. Gold finished at $1,672.9 /t. oz. The price of silver, even more than gold, hiked on a weekly scale by 9.34%, and its average rate rose by 6.5% to $29.82/t oz. Furthermore, during last week the SPDR Gold Shares (GLD) also rose by 3.3% and settled by August 24th at 161.97.
The Euro also increased against the U.S dollar by 1.44% (on a weekly scale); on the other hand, other “risk” currencies such as the Australian dollar and Canadian dollar depreciated against the U.S dollar by 0.14% and 0.33%, respectively. The rise of the Euro may have contributed to the rally of bullion rates. The correlation between the Euro/USD and precious metals remains strong: during the month the correlation between Euro/USD and gold reached 0.51 and between AUD/USD and gold the correlation was 0.4. This means if the Euro will continue to trade up it could pressure up gold and silver during the forthcoming week.
In the video below there is a broad review of the main publications, speeches and events that may affect gold and silver prices between August 27th and August 31st. These include the above-mentioned news items such as: Bernanke’s speech, pending home sales, U.S consumer confidence report, U.S GDP for Q2, China’s manufacturing PMI, Canada’s GDP, ECB President Speech and U.S. jobless claims (just to name a few).
In conclusion, I guess gold and silver prices will continue to trade up but at a lower rate then they did during last week. The effect of the minutes of the FOMC meeting, and the rekindled expectations of another QE program, could have some lingering effects on the bullion market especially if Bernanke will drop a hint in his upcoming speech at Jackson Hole. There are several other reports that could affect precious metals rates to move in different paths: if the U.S housing market – the pending home sales– will continue to dwindle this could positively affect bullion rates; other U.S reports including GDP and factory orders could affect the USD; if China’s manufacturing PMI will edge down below the 50 mark, this could adversely affect commodities rates. There are ongoing speculations that EU will issue, in the near future, a bond purchase program. The ECB President’s speech at the end of the week could clear up some of these speculations. Finally, if the Euro, Aussie dollar and other exchange rates will rally against the USD, this trend could pull up precious metals.
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