During the previous week, gold and silver prices decreased. Last week’s EU Summit didn’t ease the concerns of traders as Spain didn’t request a bailout. Several U.S reports may have contributed to the decline in gold and silver prices: the Philly Fed index turned positive for the fist time since April; housing starts hiked by 15% during last month; U.S core CPI rose by 0.1% during September. During last week the Euro/USD rose by 0.56%; on the other hand, the Canadian dollar depreciated against the USD by 1.39%. The main events of the week will shift back to the U.S and will include the FOMC meeting and U.S third quarter GDP report.
Here is a short outlook for October 22nd to 26th; this includes a fundamental analysis of the main publications and events that may affect precious metals markets such as: FOMC meeting, U.S GDP, U.S new home sales, BOC rate decision, China’s flash manufacturing PMI, U.S core curable goods, GB GDP for Q3, BOE Governor Speech, and U.S. jobless claims.
Gold declined during last week by 2.03%; further, during said time the average rate reached $1,741.12 /t. oz which is also 1.48% below the previous week’s average. Gold finished at $1,759 /t. oz.
Silver also fell during last week by 4.67%; further, the average rate decreased by 3.51% to reach $32.78/t oz compared to the previous week’s average $33.97/t oz.
The Euro increased against the U.S dollar by 0.56% (on a weekly scale); alternatively, some “risk” currencies such as the Canadian dollar depreciated against the U.S dollar by 1.39%. The mixed trend of the Euro and Canadian dollar may have contributed to the shifts in precious metals. The correlation between the Euro/USD and precious metals remains mid-strong and positive: during September/October the correlation between Euro/USD and gold reached 0.54 and between USD/CAD and gold the correlation was -0.62. Thus, if the Euro and other “risk” will trade down during the upcoming week, this may prolong the recent downward trend of gold and silver.
In the video below there is a broad overview of the main publications, speeches and events that may affect gold and silver prices between October 22nd and October 26th. These include the above-mentioned news items such as: FOMC meeting, U.S GDP, U.S new home sales, BOC rate decision, China’s flash manufacturing PMI, U.S core curable goods, GB GDP for Q3, BOE Governor speech, and U.S. jobless claims (just to name a few).
In conclusion, I guess gold and silver will further decline during the upcoming week. Nonetheless, the upcoming FOMC meeting might have a strong positive effect on the bullion market mainly if the FOMC will announce or even just hint of new stimuluson steps it considers in the near future. I still think the Fed won’t make any big announcements. The upcoming reports regarding the U.S economy include the U.S GDP, core durable goods and home sales could pull down precious metals rates if these reports will show the U.S economy is expanding. This, in turn, could lower the chances of Fed introducing additional monetary in the near future. If China’s flash manufacturing PMI report won’t show any growth, this could adversely affect commodities prices. The ongoing depreciation of the Indian Rupee may have curbed the growth in demand for gold in India, among the leading countries in gold imports. Finally, if the Euro, Aussie dollar, Canadian dollar and other exchange rates will change direction and fall against the USD, this could also adversely affect precious metals.
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