During last week, gold and silver prices slightly declined. A couple of U.S reports may have moderately affected forex and commodities prices: the U.S PPI rose by 1.1% during September; U.S jobless claims fell by 30k to 339k. These news items may have contributed to movement of the USD against other major currencies, and consequently bullion rates. In Europe, the speculations around the future move of Greece and Spain and their debt crisis might reach new high this week as the EU Summit will be held. If the EU Summit will result in some big headlines, such as Spain making the formal request to ECB to start its bond purchase program, this could help rally the Euro. Nonetheless, during last week the Euro/USD fell by 0.68%; on the other hand, the Aussie dollar rose by 0.47%.
Here is a short outlook for October 15th to 19th; this includes a fundamental analysis of the main publications and events that may affect precious metals markets such as: U.S CPI, Housing starts, Euro summit, China’s GDP, U.S retail sales, Philly Fed index, FOMC members’ speeches, Canadian core CPI, Existing home sales, and U.S. jobless claims.
Gold declined during last week by 1.18%; further, during said time the average price reached $1,767.22 /t. oz which is also 0.9% below the previous week’s average rate of $1,783.2 /t. oz. Gold finished at $1,759 /t. oz. Silver also declined during last week by 2.61%; further, the average rate decreased by 2.37% to reach $33.97/t oz compared to the previous week.
The Euro decreased against the U.S dollar by 0.68% (on a weekly scale); alternatively, some “risk” currencies such as the Australian dollar appreciated against the U.S dollar by 0.47%. The mixed trend of the Euro and Australian dollar may have contributed to the modest changes 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 0.63 and between Australian dollar/USD and gold the correlation was 0.69. Therefore, if the Euro and other “risk” will resumed their rally during the upcoming week, this could further pull up 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 15th and October 19th. These include the above-mentioned news items such as: U.S CPI, Euro summit, China’s GDP, U.S retail sales, Philly Fed index, FOMC members’ speeches, Canadian core CPI, U.S housing starts, existing home sales and U.S. jobless claims (just to name a few).
In conclusion, I guess gold and silver will change direction and resume their rally during the upcoming week. They may resume their rally but won’t rise by a high margin. The upcoming reports regarding the U.S economy include the U.S Philly Fed, CPI, and housing starts could pull up precious metals rates if these reports will show the U.S economy isn’t expanding. This, in turn, could raise the chances of Fed introducing additional monetary in the near future. The upcoming EU Summit might end the speculations around the future move of Spain and deal with the next bailout for Greece. If the Summit will deal with these issues and resolve them it could help rally the Euro and consequently bring the prices of gold and silver back up. On the other hand, if China’s GDP report won’t show higher growth rate than in previous quarters, this could adversely affect commodities prices. The recent modest depreciation of the Indian Rupee may have curbed the rise in demand for gold in India, the largest importer of gold. Finally, if the Euro, Aussie dollar, Canadian dollar and other exchange rates will resumed their rally against the USD, this could also positively affect precious metals.
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