The gold and silver market rallied again during last week. The bullion market’s recovery was partly due to the recent depreciation of the U.S dollar against leading currencies. The minutes of the March FOMC meeting were released and opened the debate regarding when the FOMC will raise its cash rate. The minutes showed there isn’t a clear cut consensus regarding the timing so that the current guesses of mid-2015 might not be the timing. This news was enough to rally precious metals. Will gold and silver continue to rally? For the week of April 14th to April 18th, several reports and events will come to fruition including: Janet Yellen’s speech, U.S retail sales, China’s GDP, U.S industrial production, EU industrial production, U.S CPI, U.S housing starts and building permits, China new loans, and Philly Fed index.
The price of gold rose by 1.2% last week; conversely, the average price reached $1,310.18/t. oz which was 1.69% higher than last week’s average rate. Gold ended the week at $1,318.6 /t. oz.
The price of silver remained unchanged; but the average weekly rate was $19.95/t oz, which was 0.53% above last week’s rate.
Herein is a short overview showing the main decisions, reports and publications that will unfold during April 14th to April 18th and may affect precious metals prices.
Let’s breakdown the main events, speeches and reports by leading economies:
Last week’s minutes of the FOMC meeting were enough to pull back up gold and silver prices and pressure down the U.S dollar. This trend could change course if the Chair of FOMC Janet Yellen will address this issue and perhaps raise the speculations again around the timing of raising the cash rate. She will be giving a speech on Wednesday titled “Monetary Policy and the Economic Recovery” at the Economic Club of New York. If she addresses the FOMC’s monetary policy and hints the FOMC could raise its cash rate as early as mid-2015, this news could drag back down the prices of gold and silver.
Besides Yellen’s speech, this week, several reports will be released including: Retail sales, CPI, Philly Fed index, housing starts, building permits, industrial production, and jobless claims. If these reports show signs of growth in the U.S economy, they could pull back down precious metals prices.
During last week, the US dollar sharply depreciated against the Euro, Canadian dollar, Japanese Yen, and Aussie dollar, which may have also pulled up gold and silver prices. If the U.S dollar further weakens against leading currencies; this could moderately pressure up gold and silver.
This week several reports will be released: Great Britain CPI, EU Industrial Production, German ZEW economic sentiment, EU CPI, and Great Britain claimant count change. These reports could affect the Euro and British pound, which could partly affect the gold and silver.
India and China
During last week, the Indian Rupee slipped against the US dollar. If the rupee continues to fall, it could decrease the demand for gold and silver in India.
In China, the GDP for the first quarter of 2014, new loans, and CPI updates will be released and could shed some light on China’s growth. This in turn, could indicate of potential shifts in the demand for gold and silver in China.
Finally, during last week, gold holdings of SPDR gold trust ETF declined again by nearly 0.6%. The ETF is still up by 0.4% since the beginning of the year. Gold holdings were at 804.42 tons by the end of last week. If the ETF’s gold holdings drops again, this may signal the demand for gold as an investment is weakening.
The recent pull back from the latest developments in the U.S might not last long especially if FOMC Chair Yellen talks about the Fed’s policy and hints of the timing of raising the fund rate. Moreover, the upcoming U.S reports could show additional progress, which could also pressure down gold and silver. The drop in demand for gold as an investment, as indicated in the decline in GLD’s gold hoards, could continue and thus pressure down precious metals prices. Conversely, the recent depreciation of the U.S dollar and the shift in market sentiment towards risk aversion could benefit bullion investors. Therefore, I think the volatility of precious metals will pick up this week, but I remain neutral on gold and silver.
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