During last week, gold and silver didn’t do much. Their rally coincided with the depreciation of the US dollar against currencies such as Euro and Japanese yen. Bernanke’s testimony reminded that the Fed won’t taper QE3 until the U.S economy will show clear signs of progress. This news, however, didn’t stir up the precious metals markets. In the U.S several reports mostly showed a positive sentiment regarding the progress of the economy: Housing starts fell by 9.9% during June compared to May; Philly Fed index also rose to 19.8 in July; U.S jobless claims fell by 24k to 334k; Retail sales slightly increased by 0.6% during June. Will gold and silver resume their downward trend this week? Here is a short forecast for July 22nd to July 26th; this includes a fundamental analysis of the main publications that may affect precious metals markets. These include: U.S core durable goods, EU monetary developments, U.S housing starts, Canada’s retail sales, China manufacturing PMI, U.S existing home sales, and U.S. jobless claims.
The price of gold slightly increased by 1.20% last week; moreover, during last week, the average price reached $1,285.70 /t. oz which was 2.27% above last week’s average.
The price of silver slipped by 1.68%; conversely, the average weekly rate was $19.60/t oz, which was 0.99% above last week’s.
Herein is a short overview that outlines the main publications and decisions that may affect gold and silver next week between July 22nd and July 26th.
Based on upcoming reports and latest developments, gold and silver prices might not do much during the week. They might resume their downward trend if the upcoming U.S reports including new and existing home sales, jobless claims and core durable goods will keep showing signs of progress. These reports could indicate the U.S economy is progressing and thus pull down the demand for safe haven investments such as gold and silver. These reports could also suggest the Fed might be one step closer towards tapering QE3, which is also likely to adversely affect bullion prices. In China, the upcoming manufacturing PMI report could affect the Aussie dollar, which is strongly correlated with precious metals prices. The US dollar depreciated during last week against leading currencies including Euro, Aussie dollar and Japanese yen. If this trend will change course, and the US dollar will rally, this could also adversely affect precious metals prices. Nonetheless, based on the upcoming publications it is more likely that precious metals prices won’t do much during the week and the volatility will be low, much like the low volatility during last week.
Despite last week’s recent rise of gold price, gold holdings of the SPDR gold trust ETF continue to dwindle: the ETF’s gold holdings fell by 3.82% during July and by 30.97% during the year (up to date). Current gold holdings are at 932.4 tons. If the ETF’s gold holdings continue to fall, this could indicate the demand for gold as an investment further diminishes. In India, silver imports rose during the first five months of 2013 despite the rise in precious metals import taxes. Finally, the Indian Rupee slightly appreciated against the US dollar during last week; if the Rupee will continue to rise; it may also positively affect the demand of gold and silver in India.
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