Gold and Silver Prices Outlook for April 29 – May 3

Gold and silver changed course and rallied during last week. Was the recent rally a correction to the plunge in precious metals prices from the previous week? Was it a shift in market sentiment? Or was it a short term rally that will soon change course again? Along with gold and silver, other commodities also rose including the price of oil. The rally of commodities along with the weak performance in equities markets during last week might suggest that some investors have reinvested their funds in commodities. Last week’s U.S reports showed a mixed signal regarding the progress of the U.S economy: The core durable goods fell by 1.4% in the past month; new home sales slightly rose by 1.5%; the U.S GDP grew in the first quarter of 2013 by 2.5% – lower than the rate many economists had expected. This mixed signal may have contributed to the high volatility of gold and silver during last week. Will the market sentiment regarding gold and silver change direction again?  Here is a short outlook for April 29th to May 3rd; this includes a fundamental analysis of the main reports, publications and decisions that may affect precious metals. These include: U.S non-farm payroll report, FOMC meeting, ECB rate decision, U.S and China’s manufacturing PMI, U.S pending home sales, EU economic outlook, Japan’s monetary policy base, Canada’s GDP by industry, governor Carney’s speech,  U.S trade balance, and U.S. jobless claims.  

Gold sharply fell during last week by 7.04%; during the week, the average weekly price reached $1,383.4 /t. oz which was 11.12% below last week’s average. Gold reached by the week at $1,395 /t. oz.

Silver also tumbled down during last week by 12.8%; moreover, the average weekly rate decreased by 14.78% to reach $23.30/t oz compared to last week’s average.

Herein is a short overview that outlines the main reports, speeches and events that may affect gold and silver next week between April 29th and May 3rd. Moreover, the video below shows a breakdown of the events that will come into play during next week any may affect the direction of precious metals.

Based on above and recent developments regarding gold and silver, the prices of precious metals might slightly rise by the end of the week and thus continue this recent correction. Gold and silver might start off the week on a negative note to correct their sharp rise from last week. Moreover, I still think that precious metals will resume their downward trend in the coming weeks.  If the upcoming U.S reports including: non-farm payroll report, jobless claims, and pending home sales will show signs of slowdown, they could drag further down gold and silver. ECB’s rate decision could affect not only forex markets but also precious metals markets: If ECB will stick with its current policy and won’t hint of any future rate cut; the Euro is likely to rally, and it will pull along with it commodities prices. On the other hand, the upcoming PMI reports on China and U.S might pull down precious metals if these reports will show slowdown in the manufacturing sectors in these regions.

The upcoming FOMC meeting might not have a strong effect on precious metals or USD. In the recent meeting the Fed left its policy unchanged. Following the meeting, precious metals didn’t change by a high rate. The current expectations are that the FOMC will leave its policy unchanged, which may pull slightly up gold and silver.

The SPDR gold trust ETF holdings continue to tumble: the ETF gold hoards fell by 11.3% since the beginning of April. If the holdings will continue to fall, they could indicate the demand for gold continues to dwindle. Some analysts speculated that there was a rise in the physical demand for bullion, following the tumble in precious metals prices during the previous weeks. The rally of the Japanese yen and Canadian dollar during last week may have also partly contributed to the recovery of commodities prices. If these currencies, along with Euro and Aussie dollar, will continue to appreciate against the USD, they might also pull up precious metals. Finally, in India during last week, the Rupee depreciated against the USD; if this trend will continue, as it did during the week; it may adversely affect the demand for gold in India.

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