Gold and Silver Forecast for September 1-5

The prices of gold and silver didn’t do much last week as they edged up on a weekly scale. But September is starting off with rate decision by ECB, BOE, BOC, RBA and BOJ. The main event will be the ECB rate decision and press conference. In the U.S, the non-farm payroll report will be released on Friday and could stir up the bullion market. Other major reports include factory orders, manufacturing and non-manufacturing PMI reports. So let’s analyze the economic calendar for the week of September 1st to 5th

Gold and silver inched up by 0.6% and 0.2%, respectively. On a monthly scale gold slightly increased by 0.4%, while silver prices dropped by 4.8%. But precious metals could resume their downward trend this week on account of the upcoming reports to be released most notably the NF payroll report.

The current projections are for another strong monthly gain of over 200K (estimates are at 222K). If the report shows a higher than expected gain, this report could bringing down precious metal prices.

Several additional economic reports will be released in the U.S including factory orders, manufacturing PMI and non- manufacturing PMI. These reports could also provide additional information regarding the progress of the U.S economy. Currently, market estimates show the manufacturing PMI and non- manufacturing PMI are to slightly fall from last month’s levels. But if these reports turn out positive and beat market expectations, they could also slightly drag down gold and silver.

Last week, demand for gold as an investment changed direction again and fell as gold hoards in the GLD ETF, which is the world’s largest gold ETF dropped. The current gold holdings are at 794.999 tons by the end of last week – nearly 0.64% below the previous week and down by 0.85% since the beginning of August. If gold hoards resume their downfall, this could signal the demand for gold as an investment is diminishing.

The US dollar kept recovering against the Euro and Yen. The upcoming ECB rate decision could bring further down the Euro against the USD especially if ECB President Draghi offers some more information about the monetary steps the ECB wishes to take in order to pull up the EU from its current stagnation. Last week’s flash CPI was inline with projections of an annual rate of 0.3% – still a long way from the 2% target the ECB holds. Thus, if the USD strengthens again against the leading currencies, this could further bring down gold and silver.

The U.S equities continue to rally as the S&P500 index added 3.7% in August. If the stock markets keep recovering, this could steer more investors away from precious metals and into equities.

Takeaway

The upcoming NF payroll report and the ECB rate decision could bring up the USD and drag down precious metals. But we aren’t likely to see big moves on a weekly scale. The next FOMC meeting later this month could bring back the volatility of precious metals.

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