Gold and Silver Prices Outlook for July 1-5

During last week, gold and silver continued to trade down.  The weakness of precious metals coincided with the depreciation of leading currencies against the USD. Following the recent FOMC meeting, in which it was hinted the Fed may taper QE3 in the coming months, precious metals have yet to recover from that event. The signs of recovery of the U.S economy are raising the chances of the Fed tapering its asset purchase program in the near future. U.S new home sales increased during May; new orders of manufactured durable goods rose by $8.0 billion or 3.6% during May; consumer confidence report showed another rise in consumer confidence index as of June. On the other hand, U.S GDP growth rate for the first quarter was revised down to 1.8%.

Will gold and silver continue to trade down this week?  Here is a short outlook for July 1st to July 5th; this includes a fundamental analysis of the main reports, and publications that may affect bullion markets. These include: U.S non-farm employment report, China and U.S manufacturing PMI, ECB,  RBA and BOE rate decisions,  ECB RBA and BOE rate, U.S and Canada’s trade balance reports, German factory orders, and U.S. jobless claims.

During last week, gold price sharply fell last week by 5.26%; moreover, the average price reached $1,243.34 /t. oz which was 7.23% below last week’s average. Gold ended the week at $1,223.8 /t. oz.

Silver also decreased during last week by 2.55%; further, the average weekly rate was $19.12/t oz, which was 8.81% below last week’s.

Herein is a short overview that outlines the main publications, events and decisions that may affect gold and silver next week between July 1st and July 5th.

Based on the forthcoming reports and the recent developments, precious metals prices might continue last week’s downward trend. Following two weeks of sharp falls, gold and silver might start the week with a correction but the downward trend is likely to persist. Last week’s fall of leading currencies against the USD including the Euro, Japanese yen and Aussie dollar also drag down precious metals prices.

In the U.S, the upcoming reports including: trade balance, non-farm payroll report, jobless claims, factory orders and manufacturing PMI may provide some insight regarding the progress of the U.S economy. If these reports will show continuous growth, they could pull back bullion prices. China’s manufacturing PMI report could positively affect commodities prices if the PMI will rally. The upcoming rate decisions of ECB, RBA and BOE could affect the forex markets if one of these banks will change its monetary policy. The current expectations are that these banks will keep their rates unchanged.

Gold holdings of the SPDR gold trust ETF continue to dwindle: the ETF’s amount of gold held fell by 4.31% during June. Current gold holdings are at 969.5 tons. If the ETF’s gold holdings continue to drop, this could indicate the demand for gold as an investment continues to dwindle. Finally, the Indian Rupee slightly appreciated against the USD during last week but fell during June; if the Rupee’s downward trend will resume; it may adversely affect the demand of gold in India.

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