The prices of gold and silver changed direction and declined during most of last week. The high volatility of precious metals during most of last week might continue in this week on account of the many items and events that will unfold. Last week several U.S reports were published and were positive: U.S GDP grew by 2.7% in the third quarter, pending home sales rose in October and U.S jobless claims declined last week. Will gold and silver continue to trade down on the first week of December?
The main events of the week will include non-farm payroll report, U.S manufacturing PMI report, ECB rate decisions, as well as rate decisions of Bank of Canada, Reserve Bank of Australia and Bank of England
Here is a short outlook for December 3rd to 7th; this includes a fundamental analysis of the main publications and events that may affect precious metals including: Euro-group meeting, ECB President’s speech, U.S non-farm payroll report, U.S manufacturing PMI, ECB rate decision, Australia’s GDP for Q3, and U.S. jobless claims.
Gold resumed its downward trend and declined during the previous week by 2.31%; during said week, the average rate reached $1,729.3 /t. oz which is also 0.24% lower than the previous week’s average. Gold ended the week at $1,710.9 /t. oz.
Silver also declined during the previous week by 2.67%; on the other hand, the average rate also rose by 1.39% to reach $33.87/t oz compared to the previous week.
The Euro edged up against the U.S dollar by 0.11% (on a weekly scale); on the other hand, other “risk” currencies such as the Australian dollar slightly depreciated against the U.S dollar by 0.31%. The correlation between the Euro/USD and precious metals has weakened during the week but is still mid-strong and positive: during the past month the correlation between Euro/USD and gold reached 0.45 and between AUD/USD and gold the correlation was also 0.45. Thus, if the Euro and other “risk” will change direction and fall during the week, this may adversely affect 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 December 3rd and December 7th. These include the above-mentioned news items such as: Euro-group meeting, ECB President’s speech, U.S non-farm payroll report, U.S manufacturing PMI, ECB rate decision, Spain’s rate of unemployment, Australia’s GDP for Q3, Canada’s employment report, Canada, Australia and GB central banks rate decision and U.S. jobless claims (just to name a few).
In conclusion, I guess gold and silver will continue their recent decline during the first week of December. Moreover, the volatility might rise again during the week as it entails many news items and events. The rate decision of ECB is likely to be the main event for Europe financial markets this week. If ECB will decide to lower the rate again by 25pp to 0.5%, this could pull down the Euro and consequently bullion rates. If other central banks will act and lower their respective interest rate (BOC, RBA, MPC) this action could adversely affect each central bank’s respective currency. In such an event, this could pull down gold and silver via the strengthening of the USD. The upcoming reports regarding the U.S economy include the non-farm payroll report, manufacturing PMI and jobless claims, could affect the USD and commodities prices: if these reports will show an ongoing growth in the U.S economy, they could adversely affect precious metals prices. The upcoming publication of Canada’s employment report could affect major commodities via its currency. The same goes for the publication of the Australian GDP for the third quarter. Both the Aussie dollar and Canadian dollar tend to have a strong relation with precious metals. If the Indian Rupee will continue to depreciate against the USD, it may pull down the demand for gold in India, among the leading consumers of gold. Finally, if the Euro, Aussie dollar, Canadian dollar and other risk currencies will depreciate against the USD, they could also adversely affect precious metals.
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