Gold and Silver Prices Outlook for September 10-14

During last week, gold and silver prices increased, mainly on Friday following the publication of the U.S labor report that showed a growth of only 96k in jobs. The upcoming FOMC meeting between September 12th and 13th will be the highlight for the week for bullion traders. If the FOMC will announce of another quantitative easing plan this news is likely to pull up gold and silver. I still think it’s too early to expect another QE program. During last week, the news about the U.S manufacturing PMI may have had a modest impact on precious metals. ECB left rate unchanged at 0.75% but ECB did introduce its bond purchase plan that is waiting for the final approval of Germany and Spain next week. Here is a short outlook for September 10th to 14th; this includes a fundamental analysis of the main publications and events that may affect precious metals markets such as: Euro Council meeting, U.S CPI and PPI, American bond auction, U.S retail sales, China’s new loans, U.S trade balance, Swiss National Bank rate decision, OPEC monthly report, German Courts ruling on EMS and U.S. jobless claims.

Gold rose during last week by 3.13%; further, during said time the average rate reached $1,704.74 /t. oz which is 2.04% above the previous week’s average rate of $1,670.6 /t. oz. Gold finished at $1,740.5 /t. oz. Silver also sharply increased on a weekly scale by 7.15%; further, the average rate increased by 4.93% to reach $32.51/t oz compared to the previous week’s average $30.98/t oz. Furthermore, during last week the SPDR Gold Shares (GLD) also hiked by 2.6% and settled by September 7th at 168.44.

The Euro also increased against the U.S dollar by 1.89% (on a weekly scale); further, other “risk” currencies such as the Australian dollar also appreciated against the U.S dollar by 0.61%. The rise of the Euro and AUD may have contributed to the rally of precious metals. The correlation between the Euro/USD and precious metals remains strong and positive: during August and September the correlation between Euro/USD and gold reached 0.61 and between Euro/USD and silver the correlation was 0.59. This means if the Euro will continue to rise it could pressure up gold and silver during the forthcoming week.

In the video below there is a broad overview of the main publications, speeches and decisions to be made that could affect gold and silver prices between September 3rd and September 7th. These include the above-mentioned news items such as: statement of FOMC meeting, U.S CPI and PPI, American bond auction, U.S retail sales, China’s new loans, Swiss National Bank rate decision, OPEC monthly report, German Courts ruling on EMS and U.S. jobless claims (just to name a few).


In conclusion, I guess gold and silver will continue to trade up on a weekly scale but at a slower pace then they did during the previous week. The hike in bullion rate on Friday, mainly due to U.S non farm payroll report, might suggests the bullion market raises the chances of another QE program. The upcoming FOMC meeting could further pull up the bullion market. Even if the FOMC won’t announce of QE3 and will only allude to the fact, it could pull up gold and silver. I still think that the FOMC won’t announce just yet of another QE program. The positive news from Europe regarding the bond purchase program helped the recovery of the Euro and consequently also rallied commodities. The upcoming Euro council meeting and the German council ruling on the bailout fund could also affect the Euro. The upcoming interest rate decisions by Swiss National Bank could affect the forex markets in Europe if the bank will change the rate. The main U.S reports of the week will be the U.S CPI, PPI, trade balance and retail sales. If these reports will show growth, this could rally the commodities and stocks markets.  Finally, if the Euro, Aussie dollar and other exchange rates will continue to appreciate against the USD, this could also positively affect precious metals.

For further reading:

2 comments for “Gold and Silver Prices Outlook for September 10-14

  1. Arun
    September 10, 2012 at 7:20 am

    It’s puzzling to see that on the same article, you make two conflicting comments. I quote below the two sentences from your article to which I’m referring.

    (1) “I still think it’s too early to expect another QE program.”

    (2) “The hike in bullion rate on Friday, mainly due to U.S non farm payroll report, might suggests the bullion market raises the chances of another QE program.”

    So in either case, whether another QE program happens or not, you’ll be able to make the “see,-didn’t-I-tell-you-so” claim.

    And then look at this other comment you’ve made in this article.

    ” … if the Euro will continue to rise it could pressure up gold and silver during the forthcoming week.”

    This has been true for a long time … and I think I’ve seen such a comment time and again in your articles here. When you put in a conditional statement like that, it doesn’t reflect any stance on what your view is about gold and silver prices next week.

    If Euro goes up, gold and silver go up. And if Euro goes down, gold and silver will go down. I have written this on my wall. And guess what, I have turned out to be “right” week after week!

    • September 10, 2012 at 7:38 am

      Hi Arun,

      Thanks for your comment and feedback.

      In regards to my comment about QE3 I have pointed out two things: 1. the market expects QE3 announcement in the upcoming FOMC meeting. 2. my guess there won’t be an announcement this week. I think coming Thursday it will be very clear if I was right or the market was right; I will be the first one to point out if and when I am wrong (it happened before…).

      In regards to the Euro I agree that there is a positive relation between the Euro and bullion but my statement of “if the Euro will continue to rise…” also implies (perhaps I should have better emphasized it) that I think the Euro will further rise based on the events for the week and my guess. And as a side note, there were times in which the Euro moved in a different direction from gold and silver so this relation isn’t clear cut and so predictable.

      I hope this clears up the issues you have referred to.

      Regards,

      Lior

Comments are closed.