During last week, gold and silver prices remained nearly unchanged, despite the FOMC decision to commence with QE3. There were several reports that were published during last week that may have had a modest effect on the bullion market. These reports were: the Philly Fed index rose by 5 points but was still negative; U.S housing starts rose in August by 2.3% while building permits declined by 1%; U.S jobless claims remained high at 382k. Here is a short outlook for September 24th to 28th; this includes a fundamental analysis of the main publications and events that may affect precious metals markets such as: U.S new home sales, Euro Area monetary development, China’s manufacturing PMI, U.S GDP for Q2 (final estimate), Italian bond auction, U.S pending home sales, minutes of BOJ monetary meeting, U.S core durable goods, Canada’s GDP, ECB President’s speech, and U.S. jobless claims.
The price of gold edged up during last week by 0.3%; further, during said time the average rate reached $1,772.34 /t. oz which is 1.33% above the previous week’s average rate of $1,749.04 /t. oz. Gold finished at $1,778 /t. oz. Silver slipped on a weekly scale by 0.05%; alternatively, the average rate increased by 1.81% to reach $34.6/t oz compared to the previous week’s average $33.99/t oz.
The Euro also declined against the U.S dollar by 1.13% (on a weekly scale); further, other “risk” currencies such as the Australian dollar also depreciated against the U.S dollar by 0.88%. The fall of the Euro and AUD may have curbed 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 0.576 and between USD/Canadian dollar and gold the correlation was 0.525. This means if the Euro will continue to trade down it could further drag down 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 24th and September 28th. These include the above-mentioned news items such as: U.S new home sales, Euro Area monetary development, China’s manufacturing PMI, U.S GDP for Q2 (final estimate), minutes of BOJ monetary meeting, U.S core durable goods, Canada’s GDP, ECB President’s speech, and U.S. jobless claims (just to name a few).
In conclusion, I guess gold and silver will continue to trade with an unclear trend during the week, unless of course there will be a big announcement. This could include the recent talks over the Greek debt or an announcement from China to add some additional plans to stimulate the Chinese economy. The FOMC decision to launch QE3 is likely to keep having some lingering effects on the prices of bullion. The upcoming ECB President speech could also affect the Euro. The main U.S reports of the week will be the U.S core durable goods, home sales (new and pending), final estimate of GDP 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 decline. The reports from Europe including German retail sales and EU monetary development and the Italian bond auction could affect the market sentiment towards the Euro, which could in turn affect commodities rates. Finally, if the Euro, Aussie dollar and other exchange rates will continue to trade down against the USD, this could also adversely affect precious metals.
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