Gold and Silver Prices Outlook for September 17-21

During last week, gold and silver prices increased, mainly on Thursday following the publication of the FOMC decision to commence with QE3 that will include the Fed buying mortgage backed securities at a pace of $40 billion per month. There were several other reports that were published during last week, such as U.S Consumer Price Index that showed a rise of 0.6% in August and U.S PPI that also hiked by 1.7%. Here is a short outlook for September 17th to 21st; this includes a fundamental analysis of the main publications and events that may affect precious metals markets such as: China’s manufacturing PMI, U.S Philly Fed survey, Spanish bond auction, U.S housing starts, EU manufacturing PMI, Japan’s rate decision, , and U.S. jobless claims..    

Gold price increased during last week by 1.85%; further, the average rate reached $1,749.04 /t. oz which is 2.6% above the previous week’s average rate. Gold finished at $1,772.7 /t. oz. Silver, even much like gold, rose on a weekly scale by 2.87%; further, the average rate increased by 4.54% to reach $33.99/t oz compared to the previous week’s average $32.51/t oz. Furthermore, during last week the SPDR Gold Shares (GLD) also rose by 2% and settled by September 14th at 171.8.

The Euro also hiked against the U.S dollar by 2.43% (on a weekly scale); further, other “risk” currencies such as the Australian dollar also appreciated against the U.S dollar by 1.6%. The rise of the Euro and AUD may have contributed to the recovery of precious metals. The correlation between the Euro/USD and precious metals remains mod-strong and positive: during August and September the correlation between Euro/USD and gold reached 0.528 and between Euro/USD and silver the correlation was 0.38. This means if the Euro will continue to trade up it could further pull up gold and silver during the upcoming week.

In the video below there is a broad overview of the main publications, speeches and reports that could affect gold and silver prices between September 17th and September 21st. These include the above-mentioned news items such as: China’s manufacturing PMI, U.S Philly Fed survey, Spanish bond auction, U.S housing starts, Japan’s trade balance, U.S. and Canada’s trade balance, EU manufacturing PMI, Japan’s rate decision, Great Britain CPI, and U.S. jobless claims (just to name a few).

In conclusion, I guess gold and silver will continue to rise on a weekly scale but at an even slower pace then they did during recent weeks. The hike in bullion rate on Thursday, mainly due to announcement of the FOMC to launch QE3 is likely to have some lingering effects on the prices of bullion. Further, the positive news from Europe regarding the German Courts to approve the bailout helped the recovery of the Euro and consequently also rallied commodities. The upcoming ECB President speech could also affect the Euro. The upcoming interest rate decisions by Japanese Bank could affect the forex markets if the bank will change the rate or expand its monetary easing plan. The main U.S reports of the week will be the U.S Philly Fed survey, housing starts, existing home sales and jobless claims. If these reports will show growth, this could rally the commodities and stocks markets. The Chinese manufacturing survey could adversely affect commodities rates if the index will further fall. Finally, if the Euro, Aussie dollar and other exchange rates will continue to trade up against the USD, this could also pull up precious metals.


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