Gold and Silver Prices Outlook for July 15-19

During last week, gold and silver changed direction and rallied along with other commodities prices. Their rally coincided with the depreciation of the US dollar against currencies such as Euro and Japanese yen. The recent publication of the minutes of the FOMC meeting and Bernanke’s speech may have changed investors’ perspective think regarding the next move of the FOMC, i.e. the FOMC won’t taper its asset purchase program in the coming months. This shift was enough to help rally bullion prices.  In other news, U.S jobless claims increased by 16k to 360k; China’s gold imports are rising, which might contribute to gold’s recovery. Will gold and silver continue to pull up this week?  Here is a short outlook for July 15th to July 19th; this includes a fundamental analysis of the main publications and events that may affect precious metals markets. These include: Bernanke’s testimonies, , U.S CPI, Philly fed survey, China’s GDP, U.S housing starts, minutes of RBA’s meeting, U.S retail sales, and U.S. jobless claims.   

During the previous week, gold price rallied last week by 5.35%; moreover, the average price reached $1,257.18 /t. oz which was 1.59% above last week’s average price. Gold ended the week at $1,212.7 /t. oz.

Silver also bounced back last week by 5.62%; moreover, the average weekly rate was $19.41/t oz, which was 0.31% above last week’s price.

Herein is a short overview that outlines the main publications, events and decisions that may affect gold and silver next week between July 15th and July 19th.

Based on forthcoming events and latest developments, gold and silver prices might change direction and fall. The sharp rise of both gold and silver prices during last week might lead to a correction at the beginning of the week especially if China’s GDP report will disappoint investors. China is among the leading countries in importing commodities. Bernanke’s testimony in Congress and Senate could affect precious metals markets if Bernanke’s testimonies and comments to the committees will change the current market expectations as to when and how the Fed will taper its asset purchase program. I suspect the upcoming testimonies could stir up the markets as the uncertainty is high regarding the Fed’s next move. If Bernanke will continue with his line of dovish line of remarks, gold and silver prices are likely to further rise. Otherwise, gold and silver could pull back. Until then, the developments in the U.S economy could influence traders: The upcoming U.S reports include: CPI, retail sales, Philly Fed index, jobless claims, and housing starts. If these reports will keep showing progress in the U.S economy, they could adversely affect gold and silver prices. China’s new loans and CPI reports could positively affect commodities prices if they will show higher than expected growth. The minutes of RBA and MPC could affect the Aussie dollar and GB pound, respectively, which are strongly correlated with precious metals.

Despite last week’s recent rally of gold prices, gold holdings of the SPDR gold trust ETF continue to pull down: the ETF’s gold holdings declined by 3.14% during July and by 30.48% during 2013. Current gold holdings are at 939.1 tons. If the ETF’s gold holdings continue to dwindle, this could indicate the demand for gold as an investment further falls. One explanation could be the robust demand for the physical metal: China’s gold imports continue to rise and India’s demand for gold rises despite the hike on gold import taxes. Finally, the Indian Rupee appreciated against the USD during last week; if the Rupee’s upward trend will continue; it may also positively affect the demand of gold in India.

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