Last week gold and silver prices bounced back on the second week of July after they had declined during the first week of the month. The minutes of the FOMC meeting came out but didn’t show any hints of a possibility of another stimulus plan and thus the report didn’t affect much bullion rates. On Friday the Chinese GDP growth rate for Q2 was published and was lower than many had anticipated as it reached only 7.6%. This news may have contributed to the rally of commodities during Friday as it raised the speculation around a possibility of BOC stimulating the Chinese economy. The main events that may affect gold and silver prices during the upcoming week will revolve around Bernanke’s testimonies, U.S housing starts, the minutes of MPC meeting, U.S retail sales, U.S core CPI ,Philly Fed survey and jobless claims.
Here is a short outlook for July 16th to July 20th; this includes a fundamental analysis of the main reports, publications, and events that may affect bullion rates.
Gold rose during last week by 0.83%; Silver, even more than gold, rose on a weekly scale by 1.67%; furthermore, the average rate reached $27.18/t oz which is 2% below the previous week’s average $27.73/t oz. Furthermore, during last week the SPDR Gold Shares (GLD) also rose by 0.28% and reached by July 13th 154.14.
The Euro on the other hand slipped against the U.S dollar by 0.33% (on a weekly scale); on the other hand, other “risk” currencies such as the Australian dollar and Canadian dollar slightly appreciated against the U.S dollar by 0.15% and 0.56%, respectively. Nonetheless, the decline in Euro/USD may have been among the factors to curb the rally of gold and silver during last week. If these currencies will further fall, it could pull bullion rates down.
In the video below there is a broad overview of the main publications, events and reports that may affect gold and silver prices between July 16th and July 20th. Some of these reports and events include Bernanke’s testimonies, U.S housing starts & building permits, the minutes of MPC meeting, BOC monetary policy, BOC rate decision, U.S retail sales, U.S core CPI , U.S existing home sales, Philly Fed survey and Jobless claims report (just to name a few).
In conclusion, I guess the recent rally in bullion rates during last week was mostly driven by speculation around the future steps of U.S and China and each country’s respective possibility of a stimulus plan; if there will be some headlines that will confirm these guesses then bullion rates may continue to rally. The testimony of Bernanke might affect the markets if he will hint of the possibility of QE3 in the near future. But I guess this won’t be the case. Further I speculate precious metals will change direction and trade down during the upcoming week. The upcoming reports from Canada and U.S such as CPI, retails sales, Philly Fed survey and housing starts might affect the commodities and forex markets. If these reports will continue to show little growth in these economies then they could adversely affect commodities rates including bullion. Finally, if the Euro and other rates will trade down against the USD, this trend could also adversely affect precious metals.
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