Gold changed direction and bounced back mainly on Wednesday, while silver dwindled on a weekly scale. Moreover, on a monthly scale gold is up by over 2% and silver is down by a similar rate (up to date). What is up ahead for gold and silver? This week, the GDP for leading economies including Japan, Germany, and Great Britain will be released. In the U.S PPI, retail sales, industrial production JOLTS, jobless claims and consumer sentiment reports will be published. Finally, in Europe, Germany’s economic sentiment and GB’s inflation report may move the local markets. So let’s analyze the economic calendar for the week of August 11th to August 15th.
This week, the main U.S report is the JOLTS report, which is considered a complementary monthly update to the non-farm payroll report. This is another key figure to examine the progress in the labor market and is highly regards among FOMC members. If the report shows little progress in the number of job opening, this could suggest the growth in the labor market isn’t picking up. In such an event, this could bring down USD and thus pull up gold and silver.
Other U.S reports include retail sales, industrial production and consumer sentiment; they are likely to have little impact on precious metals prices.
The PPI is another indication for the movement in the inflation in the U.S. If this report shows the core PPI is raising; this could be another indication for the rise in inflation pressures. The rise in inflation could increase the demand for gold investments, but this could also improve the odds of the FOMC raising the cash rate – a decision that won’t benefit the bullion market.
In the meantime, the gold reserves in Russia and Turkey have picked up in the past month, as indicated in the table below.
Despite the rise in demand for gold in certain central banks, the demand for gold in the private sectors seems to have contacted in the past several weeks.
The chart above shows the changes in the amount of gold in the GLD ETF, which is the world’s largest gold ETF. Gold holdings were at 795 tons by the end of last week. This recent fall implies the demand for the yellow metal as an investment has diminished.
But investing in gold ETFs such as GLD isn’t only one option for investing in gold – check out several other options we discussed in a recent podcast.
During last week, the US dollar moved in an unclear trend as it rose against the Euro and Canadian dollar and fell against the Yen and Aussie dollar. If the USD resumed its rally again, mainly as the upcoming economic reports show higher than expected results, it could drag down gold and silver.
In Europe, the ECB will decide on its interest rate for August. The ECB isn’t likely to change its policy in the upcoming meeting, but the press conference with ECB Draghi could stir up the forex markets if he were to refer to any potential changes to ECB’s monetary policy in the coming months or any shift in ECB’s outlook on the progress of Europe’s economic progress.
The detachment of gold and silver isn’t likely to last long so we could see these precious metals move in the same direction again. But this week’s economic reports aren’t likely to stir up the markets so we could see little movement in the precious metals markets with a modest downward trend for gold and silver.
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