Gold and Silver Prices Weekly Outlook for August 6-10

During last week gold and silver prices zigzagged during the week only the end it with gold slightly down and silver moderately up. There were many events that affected not only the bullion market, but also other commodities and the forex market. On Wednesday the FOMC announced it won’t change its monetary policy. The bullion rates declined the next day. I have referred in a recent article on the relation between the Fed’s policy and bullion prices.  On Friday the non-farm payroll report came out – employment grew by 163k – higher than expected. This news rallied the forex and commodities markets. 

During the upcoming week there are several important publications and events that may affect bullion markets: U.S trade balance, China’s CPI, Bernanke’s speech, Japan’s rate decision, RBA cash rate decision, U.S federal balance, Canada’s trade balance, and U.S. jobless claims.    

Here is a short outlook for August 6th to August 10th; this includes a fundamental analysis of the main publications, and speeches that may affect bullion rates.

Gold declined during last week by 0.83%; alternatively, during said time the average rate reached $1,609.18 /t. oz which is 0.41% above the previous week’s average rate of $1,602.68 /t. oz. Silver, unlike gold, rose on a weekly scale by 1.1%; further, the average rate rose by1.1% to reach $27.66/t oz compared to the previous week’s average $27.25/t oz. Furthermore, during last week the SPDR Gold Shares (GLD) also declined by 1.2% and settled by August 3rd at 155.55.

The FOMC kept policy unchanged. Precious metals declined the following day. This reaction is common: As seen in the table below in the last three out of four meetings precious metals declined the following day.

Gold Silver and FOMC statment August 2

The Euro rose against the U.S dollar by 0.52% (on a weekly scale); further, other “risk” currencies such as the Australian dollar and Canadian dollar also appreciated against the U.S dollar by 0.82% and 0.2%, respectively. The rise of the Euro AUD and CAD may have contributed to the recovery of bullion rates mainly at the end of the week. The correlation between the Euro/USD and precious metals remains high: during the month the correlation between Euro/USD and gold reached 0.7. This means if the Euro will continue to trade up it could pressure up gold and silver during the week.

In the video below there is a broad review of the main publications, events, statements and reports that may affect gold and silver prices between August 6th and August 10th. These include the above-mentioned news items such as: U.S trade balance, China’s CPI, Bernanke’s speech, Japan’s rate decision, RBA cash rate decision, U.S federal balance, and U.S. jobless claims (just to name a few).

In conclusion, I guess the bullion market will moderately trade down during most of the upcoming week. On the other hand there are several news items that could pressure up precious metals rates: Bernanke’s speech might rekindle the speculation in regards to the future steps of the FOMC; if the ECB will announce or hint of any its plan to rally the Euro market this could positively affect bullion rates; the additional reports and decisions could also affect bullion rates especially if there will a significant change; the U.S reports including trade balance and jobless claims could also affect commodities rates;  finally, if the Euro, Aussie dollar and other rates will continue to trade up against the USD, this trend could pressure up precious metals.

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