Gold and silver tumbled down again during the previous week. The shift in market sentiment may have been the main catalyst for the tumble in gold and silver mainly on the first day of the week. During last week it was reported that U.S housing starts sharply rose in March by 7%; U.S CPI declined by 0.2% in March while the core CPI inched up by 0.1%; Philly Fed index for April slightly fell to 2; number of jobless claims slightly rose by 4 thousand to reach 352 thousand. These reports didn’t show much change in the U.S economy and thus may have had little effect on previous metals. Bank of Canada kept its interest rate unchanged at 1%. This news didn’t help the Canadian dollar from falling by 1.3% during the week against the USD. Moreover, the Euro fell by 0.47% against the USD. The Aussie sharply depreciated by 2.2%. Will gold and silver bounce back next week? Here is a short outlook for April 22nd to April 26th; this includes a fundamental analysis of the main reports, publications and speeches that may affect precious metals. These include: China’s manufacturing PMI, U.S existing home sales, EU manufacturing PMI, BOJ monetary policy statement and economic outlook, Canada’s retail sales, governor Carney’s speech, U.S new home sales, U.S core durable goods and U.S. jobless claims.
Gold sharply fell during last week by 7.04%; during the week, the average weekly price reached $1,383.4 /t. oz which was 11.12% below last week’s average. Gold reached by the week at $1,395 /t. oz.
Silver also tumbled down during last week by 12.8%; moreover, the average weekly rate decreased by 14.78% to reach $23.30/t oz compared to last week’s average.
Herein is a short overview that outlines the main reports, speeches and events that may affect gold and silver next week between April 22nd and April 26th.
Based on the upcoming publications and latest developments regarding gold and silver, the prices of precious metals might resume their downward trend as the week will progress. Gold and silver might start off the week on a positive note to correct their sharp fall from last week, but on a weekly scale the prices of gold and silver might remain weak. If the upcoming U.S reports including: core durable goods, jobless claims, new and existing home sales, and GDP for the first quarter of 2013 will show signs of recovery, they could drag further down the rates of gold and silver. The upcoming PMI reports on China and Euro Area might also pull down precious metals if these reports will show slowdown in the manufacturing sectors in these regions.
The main issue, more than any other, that could determine is the market sentiment towards precious metals as safe haven investments. The shift in the market sentiment may have been stemmed from Goldman Sachs negative outlook on gold, the minutes of the FOMC meeting, Bank of Japan’s decision to augment its asset purchase program, the lower than excepted growth rate in China’s economy in the first quarter of 2013, or other reasons. In any case, investors seem disappointed by gold and silvers’ poor performance, the unrealized inflationary pressures from the Fed’s QE programs, the recovery of the equity markets, and the resilience of the US dollar against leading currencies. This market shift might keep gold and silver from pulling back to their high levels from the beginning of the month. Perhaps another major event in the financial markets (e.g. another Cyprus like crisis or the Fed augmenting its QE3 program) might push precious metals from their current weakness.
The SPDR gold trust ETF holdings continue to fall: the ETF gold hoards fell by 16% since the beginning of the year. If the holdings will continue to dwindle, they could indicate the demand for gold is diminishing. The decline in the Euro and Aussie dollar during last week may have also partly contributed to the decline in commodities prices. If these “risk related” currencies will continue to depreciate against the USD, they might also pull down precious metals. Finally, in India during last week, the Rupee appreciated against the USD; if this trend will continue, as it did during the week; it may positively affect the demand for gold in India.
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