Gold and Silver Outlook for April 20-24

The bullion market cooled down in the past several days as both gold and silver slightly declined last week. ECB’s rate decision didn’t provide any major headlines, albeit the Euro resumed its rally. The ongoing fall in LT treasuries yields and weakness in USD weren’t enough to bring back up gold and silver prices. But if these trends persist, they could, keep up gold and silver. This week: China’s manufacturing PMI (HSBC), U.S. core durable goods, Euro group meetings, EU manufacturing PMI,  BOE rate decision, German economic sentiment, and jobless claims. Here is a preview for April 20th to 24th, 2015:  

Following last week’s ECB policy meeting, in which there were no big headlines as ECB President Draghi kept the policy unchanged. He did refer to the progress of the QE program, but didn’t offer any news about the ECB policy.

In the U.S. the main report will be the core durable goods that could offer additional information about the progress of the U.S. economy. In China, the manufacturing PMI report by HSBC will be released.  China took the center stage in the past couple of days after POC lowered again its RRR to 18.5%. If China keeps making changes to reheat the economy again, this could play in favor for silver and gold prices.

Long term treasuries yields kept coming down: As of the end of last week, 10 year yields reached 1.87% — this represents a 0.3 percentage points decline since the beginning of the year, up to date.

Based on recent changes in the bonds market, the implied probabilities of a rate hike have decreased to 10% for July and 27% for September, based on CME’s calculations.

By the end of the previous week, gold holdings in the GLD ETF bounced back to 739.065 – a 0.65% gain compared to last week; The ETF’s gold holding are up by 3.8% for the year, up to date.

Another slow week ahead?

Last week didn’t entail too many thrills for bullion investors and this week isn’t likely to be much different. Even though the U.S. dollar fell again, precious metals didn’t perform well and remained weak. Also, long term treasuries yields kept coming down, albeit this trend coincided with the soft bullion market. In the last week of April, however, the volatility in the bullion market could pick up again as the FOMC meeting and GDP report for U.S. will take the center stage. Until then, we could see another week of relatively smooth sailing for gold and silver.

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