Gold and Silver Forecast for June 9-13

Gold and silver bounced back last week despite their modest fall on Friday following the released of the NF payroll report, in which 217K jobs were added during May – inline with markets projections. Even the decision of the ECB to implement a negative deposit rate didn’t stir up precious metals prices. Will gold and silver change course again and fall? For the week of June 9th to 13th, the main U.S economic reports include retail sales, JOLTS job opening PPI and jobless claims. In Europe, industrial production report and Great Britain claimant count change will be released. In China, trade balance, CPI and new loans monthly updates will be provided. Let’s start with a quick recap of last week’s developments and then analyze the expected reports for this week.    

During last week, the price of gold rose by 0.51%. Gold ended the week at $1,252.20 /t. oz. The price of silver, much like gold, rallied by 1.65%.

Herein is a short overview showing the main decisions, reports and events that will come to fruition during June 9-13 and may affect the precious metals market.

For a short overview of the main reports of June, check out this video:


Let’s breakdown the main events, speeches and reports by leading economies:

U.S

On Friday, the recent non-farm payroll report was released in which, 217K jobs were added — inline with market expectations and slightly higher than the ADP estimates. The U.S unemployment rate remained unchanged at 6.3%.

This report didn’t shack the markets and since it was still a positive report, it seems to have had a modest negative impact on precious metals prices, as indicated in the table below.

U.S.Labor Reports gold price and silver prices June 6  2014Several U.S economic reports will be published this week most notably retail sales, PPI, JOLTS Job Openings, jobless claims, and UoM Consumer Sentiment. If these reports also show the U.S economy is progressing, they could pull up U.S equities and steer investors away from precious metals. 

During the previous week, the US dollar slightly depreciated against the Euro and Aussie dollar but rallied against the Yen and Canadian dollar. The correlations among gold, silver and leading currencies pairs continue to be weak as indicated in the chart below.

Correlation Gold and EURO USD 2014 June 8Based on the above, the recent movement of the U.S dollar didn’t have much of an impact on the direction of gold and silver. 

Europe

Following the recent decision of ECB to introduce a negative deposit rate of -0.1%, the Euro remained relatively flat. This news may have pushed investors towards precious metals as gold and silver slightly rose on Thursday. This week, there aren’t too many reports or events to stir up the Euro. The release of the earlier mentioned reports could have a modest impact on the Euro and consequently an even smaller impact on bullion prices.

Asia

This week, several reports will be released, which are related to China’s economy including trade balance, new loans and CPI. These reports could signal the changes in China’s progress.  If these reports show lack of growth, they could indicate China’s economy isn’t growing any faster, which will suggest its demand for precious metals has diminished.

Bank of Japan will decide on its cash rate and monetary policy. The USD/YEN isn’t strongly correlated with precious metals prices in recent weeks, as indicated in the chart above. Therefore, unless BOJ make a substantial change to policy, this news is likely to have a modest impact on bullion prices.

During last week, the Indian Rupee slightly rose against the US dollar. If the rupee keeps appreciating, it could strengthen the demand for precious metals in India.

 

Finally, during the previous week, gold holdings of SPDR gold trust ETF slightly increased again by 0.23%. The ETF is still down by 1.77% since the beginning 2014. Gold holdings were at 787.076 tons by the end of last week. If the ETF’s gold holdings keep increasing, this may signal the demand for gold as an investment is strengthening.

 

Final note

The main reports of the week will revolve around the U.S retail sales and U.S JOLTS report. The recent NF payroll report and ECB rate cut could play some lingering effects on the bullion market at the beginning of the week. Based on the upcoming news and recent developments, I think gold and silver will change course and slightly fall.

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