Gold and Silver Prices Weekly Outlook for July 30- August 3

Last week gold and silver prices started off falling but by they have bounced back during the last few days .  There were several reports and statements that helped rally the Euro.  GB’s GDP contracted in the second quarter of 2012; ECB President Mario Draghi’s pledge to preserve the Euro; the number of new home sales sold and the pending home sales also declined; by Friday the second quarter U.S GDP expanded by only 1.5%, which wasn’t much different than many had anticipated.

These events and reports may have also contributed to the rise in bullion rates.

In anticipation for next week’s FOMC meeting the members will probably consider the low growth of the U.S GDP, the ongoing slow recovery of the labor market, the recent appreciation of the USD; the current condition in the U.S may tilt the scales towards another quantitative easing plan.   I still think the Fed won’t announce of another QE in the upcoming FOMC meeting. This week the ECB and MPC will also announce of EU and GB interest rate, respectively. Other important publications and reports that may affect bullion markets: U.S non-farm employment report, China’s manufacturing PMI, U.S manufacturing PMI, Spain’s GDP, Euro Area inflation, Australia’s trade balance, Canada’s GDP and U.S. jobless claims.

Here is a short outlook for July 30th to August 3rd; this includes a fundamental analysis of the main publications, and speeches that may affect bullion rates.

Gold rose during last week by 2.52%; further, during said time the average rate reached $1,602.68 /t. oz which is 1.24% above the previous week’s average rate of $1,583.02 /t. oz. Silver also rose on a weekly scale by only 0.72%; on the other hand, the average rate nearly didn’t change as it reached $27.25/t oz which is 0.01% above the previous week’s average $27.25/t oz. Furthermore, during last week the SPDR Gold Shares (GLD) also rose by 2.5% and settled by July 27th at 157.54.

The Euro also rose against the U.S dollar by 1.36% (on a weekly scale); furher, other “risk” currencies such as the Australian dollar and Canadian dollar also appreciated against the U.S dollar by 1.01% and 0.93%, respectively. The recovery of the Euro AUD and CAD may have contributed to the rally of bullion rates. The correlation between the Euro/USD and precious metals remains robust: during the month the correlation between Euro/USD and gold reached 0.72. This means if the Euro will continue to rise it could pressure up gold and silver during the week.

In the video above there is a broad overview of the main publications, events, statements and reports that may affect gold and silver prices between July 30th and August 3rd. These include the above-mentioned news items such as: FOMC meeting, ECB rate decision, U.S non-farm payroll report, MPC monetary policy, U.S manufacturing PMI, China’s manufacturing PMI, U.S. jobless claims (just to name a few).

In conclusion, I guess the bullion market will start off the week with little movement and as the week will progress the volatility may rise; the FOMC decision could affect the bullion rates especially if the FOMC will announce of QE3. But I think this won’t be the case mainly since the Fed had already extended operation twist in the recent FOMC meeting. As seen in the table below in the last two out of three meetings precious metals declined the following day.

Gold Silver and FOMC statment July 30

The additional reports and decisions could also affect bullion rates especially if there will a significant change. If the U.S reports including manufacturing PMI and non-farm payroll report will be below expectations then they could also adversely affect commodities rates.  If the MPC or ECB or both will change the monetary policy it could affect the Euro and in turn bullion rates.

Finally, if the Euro, Aussie dollar and other rates will continue to rally against the USD, this trend could pressure up precious metals.


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