Gold and silver changed course and bounced back during last week. Their recovery coincided with the appreciation of leading currencies such as Euro and Japanese yen against the USD. Moreover, the recent fall of U.S equity markets may have also contributed the rally of bullion rates. Last week, the minutes of the FOMC meeting and Bernanke’s testimony in Congress raised the speculations that the Fed may taper its asset purchase program Will gold and silver resume their downward trend this week? Here is a short outlook for May 27th to May 31st; this includes a fundamental analysis of the main reports, decisions and events that may affect gold and silver markets. These include: U.S consumer confidence, BOC rate decision, EU monetary development, U.S GDP for Q1 (second estimate), China manufacturing PMI, Canada’s GDP, German retail sales, Australia Private New Capital Expenditure and U.S. jobless claims.
Gold rate increased during the previous week by 1.6%; on the other hand, during the week, the average weekly price reached $1,381.5 /t. oz which was 1.41% below last week’s average. Gold ended the week at $1,386.6 /t. oz.
Silver also rallied last week by 0.61%; further, the average weekly rate decreased by 1.95% to reach $22.49/t oz compared to last week’s average.
Herein is a short overview that outlines the main reports, speeches and decisions that may affect gold and silver next week between May 27th and May 31st. Moreover, the video below presents a breakdown of the main reports and events that will unfold during the week any may affect the path of precious metals.
According to the above-mentioned the prices of precious metals might resume their downward trend during the week. The slow movement of precious metals might continue if gold and silver volume of trade will continue to dwindle. Last week, Bernanke’s testimony seems to have had a stronger adverse effect on the stock market than on precious metals markets. Nonetheless, if investors will continue to speculate that the Fed might taper in the near future its QE3 program; this could also adversely affect precious metals prices. In the meantime, the upcoming U.S reports will provide some insight regarding the progress of the U.S economy. These reports include: second estimate of GDP, and consumer confidence. If these reports will show signs of recovery, they could help pull up the equities markets that fell last week and indirectly adversely affect precious metals prices. If the upcoming financial reports including: China’s manufacturing PMI, Germany’s retail sales Canada’s GDP and EU monetary won’t show signs of improvement, they could drag down gold and silver.
The SPDR gold trust ETF holdings continue to lose ground: the ETF’s amount of gold held declined by 5.5% since the beginning of the month and by 24.77% since the beginning of the year. If gold holdings will continue to fall, they could indicate the demand for gold as an investment continues to dwindle. The recent rally of the Euro and Japanese yen during last week may have also partly contributed to the recovery of bullion prices. If these currencies will change course and depreciate against the USD, they might drag down bullion rates. Finally, the Indian Rupee depreciated against the USD in the previous week; if this trend will persist; it may adversely affect the demand of gold in India.
For further reading:
- Is the Golden Era of Gold Over?
- Weekly Outlook of Financial Markets for May 27-31
- Will Gold Recover from its Recent Fall?
- Gold and Silver Yearly Outlook For 2013
- Gold and Silver Outlook for May