Gold and Silver Outlook for January 5-9

The prices of gold and silver took another tumble to end the year on a negative note. This week will the first full working week of 2015 that is likely to see a rise in volatility. This week the main reports of the week are the NF payroll report and minutes of the last FOMC meeting – both reports could move not only U.S. dollar but also bullion prices. Besides these updates, this week, other reports will be released including: U.S. non-manufacturing PMI, EU flash CPI, U.S. factory orders, U.S. trade balance, China’s CPI, , and Germany’s factory orders.. Here is an economic preview for January 5th to 9th, 2015:  

This week we have two main reports that will be released in the U.S – non-farm payroll and minutes of the FOMC meeting. Let’s start with the minutes.

Last month, the FOMC meeting concluded with a lot of changes to the wording for the statement but resulted in little impact on the bullion market.

The FOMC aimed towards keeping the markets calm without revealing its hand with a balanced message that didn’t lean towards the hawks or the doves. Moreover, the FOMC omitted the “considerable time” phrase as a policy guideline, but still left it as reference for the current policy. The statement was a bit convoluted and didn’t provide much new information about the next move of the Fed. So we don’t know much more about the next FOMC rate hike, i.e. the prices of gold and silver aren’t moving anywhere.

The minutes may offer insight behind the previous statement, which had the most dissenters in recent years.

Any hint of the FOMC turning move hawkish as more members consider raising rates sooner than market expectations (currently around mid-2015) could bring further down the prices of gold and silver. Any dovish tone could do the opposite.

The other main report of the week is the NF payroll that will released on Friday. In the last employment report, the number of non-farm payroll employment grew by 321K – higher than market expectations; the U.S unemployment rate didn’t’ change, however, at 5.8%.

If the upcoming report shows another strong gain — current estimates are at 241K – and this new could take another hit at the prices of gold and silver.

Other reports worth noticing include: U.S. trade balance, EU flash CPI, China’s CPI, Germany’s retail sales, U.S. factory orders and U.S. non-manufacturing PMI. These reports could play a role in moving major currency pairs, which, in turn, may also correlate with the progress of gold and silver.

By the end of the last week, gold holdings in the GLD ETF declined to 709.019 tons– a 0.46% fall; it’s also down by 1.5% for 2014.

Takeaway

The recent fall in the prices of gold and silver may have been related to end-of-the-year trading and low volume that could, at times, lead to sudden sharp falls or gains – depending on the situation. The main events of the weeks could still have an impact on the prices of gold and silver: The NF payroll report could bring down bullion prices if the report shows another high gain in employment. The minutes of the FOMC could move the market especially if they were to reveal the FOMC is actually leaning towards one way. My guess, gold and silver will bounce back, even if for a short time.

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