Gold price remained virtually unchanged as it inched down on a weekly scale. The price of silver declined. Their modest fall partly coincided with the depreciation of the Euro and Aussie dollar against the USD. ECB President Mario Draghi’s remarks regarding the strength of the Euro currency and the expected drop in the inflation during 2013 contributed to the sharp depreciation of the Euro. This news, however, seem to have slightly influenced bullion traders as gold and silver only moderately declined. Will gold and silver continue to trade slowly up next week? Here is a short outlook for February 11th to February 15th; this includes a fundamental analysis of the main report and decisions that may influence metals traders including: ECONFIN Meetings, BOJ monetary policy meeting, U.S consumer sentiment, U.S retail sales, Euro Area GDP for Q4, U.S federal budget balance, and U.S. jobless claims.
Gold slipped during last week by 0.22%; conversely, during said week, the average rate reached $1,672.68 /t. oz which is 0.47% above last week’s average. Gold ended the week at $1,666 /t. oz.
Silver rate decreased during the previous week by 1.62%; conversely, the average rate increased by 0.6% to reach $31.66/t oz compared to last week’s average.
The Euro changed course and tumbled down against the U.S dollar by 2.02% (on a weekly scale); the Canadian dollar also depreciated against the USD by 0.55%; the Australian dollar depreciated against the U.S dollar by 0.85%. The correlations between leading currency pairs and precious metals have moderately weakened in recent weeks: during January-February the correlation between USD/CAD and gold was -0.25 and between Australian dollar /USD and gold the correlation reached 0.35. These correlations suggest the recent developments in the forex markets may have had a modest effect on the shifts in precious metals. These correlations might strengthen in the days to come. Thus, if the Euro and other “risk” currencies will change course and appreciate during the week; this might pressure up gold and silver.
In the video below there is a broad overview of the main reports and events that may affect gold and silver between February 11th and February 15th. These include the above-mentioned news items such as: ECONFIN Meetings, BOJ monetary policy meeting, U.S consumer sentiment, U.S retail sales, U.S federal budget balance, and U.S. jobless claims (just to name a few).
In conclusion, my guess is that precious metals will change course and slowly increase during the week. The low volatility in the bullion market coincided with the low trade volume in the CME of silver and gold. If the low volume of trade will continue, this could keep gold and silver at a low volatility mode. If the ECB President or the EU policymakers in the EU Summit will come up with big headlines regarding the progress of the EU economy this could influence Euro traders and indirectly affect precious metals. The upcoming reports regarding the U.S economy including: consumer confidence, retail sales and jobless claims, could affect the USD and bullion prices: if these reports will show contraction in the U.S economy, they may positively affect gold and silver. The U.S money base has increased in recent weeks, which could lead to a rise in the price of gold via its growing demand as a safe haven investment. In India, if the Rupee will continue to weaken against the USD, as it did in the previous week; it may adversely affect the demand for gold in India. Finally, if the Euro, Aussie dollar, Canadian dollar and other risk currencies will change course and appreciate against the USD, they could also positively affect precious metals.
For further reading:
- What Could Impede This Gold Company?
- Weekly Outlook of Financial Markets for February 11-15
- Gold and Silver Outlook for February
- Gold and Silver Yearly Outlook For 2013
- Choosing Between Gold and Silver