Gold and Silver Weekly Outlook

[Samirofi]

Gold and Silver Forecast for April 14-18

The gold and silver market rallied again during last week. The bullion market’s recovery was partly due to the recent depreciation of the U.S dollar against leading currencies. The minutes of the March FOMC meeting were released and opened the debate regarding when the FOMC will raise its cash rate. The minutes showed there isn’t a clear cut consensus regarding the timing so that the current guesses of mid-2015 might not be the timing. This news was enough to rally precious metals. Will gold and silver continue to rally? For the week of April 14^th to April 18^th, several reports and events will come to fruition including: Janet Yellen’s speech, U.S retail sales, China’s GDP, U.S industrial production, EU industrial production, U.S CPI, U.S housing starts and building permits, China new loans, and Philly Fed index.


The price of gold rose by 1.2% last week; conversely, the average price reached $1,310.18/t. oz which was 1.69% higher than last week’s average rate. Gold ended the week at $1,318.6 /t. oz.


The price of silver remained unchanged; but the average weekly rate was $19.95/t oz, which was 0.53% above last week’s rate.


Herein is a short overview showing the main decisions, reports and publications that will unfold during April 14^th to April 18^th and may affect precious metals prices.


Let’s breakdown the main events, speeches and reports by leading economies:


U.S


Last week’s minutes of the FOMC meeting were enough to pull back up gold and silver prices and pressure down the U.S dollar. This trend could change course if the Chair of FOMC Janet Yellen will address this issue and perhaps raise the speculations again around the timing of raising the cash rate. She will be giving a speech on Wednesday titled “Monetary Policy and the Economic Recovery” at the Economic Club of New York. If she addresses the FOMC’s monetary policy and hints the FOMC could raise its cash rate as early as mid-2015, this news could drag back down the prices of gold and silver.


Besides Yellen’s speech, this week, several reports will be released including: Retail sales, CPI, Philly Fed index, housing starts, building permits, industrial production, and jobless claims. If these reports show signs of growth in the U.S economy, they could pull back down precious metals prices.


During last week, the US dollar sharply depreciated against the Euro, Canadian dollar, Japanese Yen, and Aussie dollar, which may have also pulled up gold and silver prices. If the U.S dollar further weakens against leading currencies; this could moderately pressure up gold and silver.


Europe
This week several reports will be released: Great Britain CPI, EU Industrial Production, German ZEW economic sentiment, EU CPI, and Great Britain claimant count change. These reports could affect the Euro and British pound, which could partly affect the gold and silver.


India and China


During last week, the Indian Rupee slipped against the US dollar. If the rupee continues to fall, it could decrease the demand for gold and silver in India.


In China, the GDP for the first quarter of 2014, new loans, and CPI updates will be released and could shed some light on China’s growth. This in turn, could indicate of potential shifts in the demand for gold and silver in China.


Finally, during last week, gold holdings of SPDR gold trust ETF declined again by nearly 0.6%. The ETF is still up by 0.4% since the beginning of the year. Gold holdings were at 804.42 tons by the end of last week. If the ETF’s gold holdings drops again, this may signal the demand for gold as an investment is weakening.


Final note

The recent pull back from the latest developments in the U.S might not last long especially if FOMC Chair Yellen talks about the Fed’s policy and hints of the timing of raising the fund rate. Moreover, the upcoming U.S reports could show additional progress, which could also pressure down gold and silver. The drop in demand for gold as an investment, as indicated in the decline in GLD’s gold hoards, could continue and thus pressure down precious metals prices. Conversely, the recent depreciation of the U.S dollar and the shift in market sentiment towards risk aversion could benefit bullion investors. Therefore, I think the volatility of precious metals will pick up this week, but I remain neutral on gold and silver.

[Samirofi]

Gold and Silver Forecast for June 23-27

The prices of gold and silver resumed their upward trend at the end of last week following the FOMC meeting. The FOMC’s statement had a general dovish overtone; Chair Yellen also kept the tight lid on the Fed’s future plans and dismissed the rise in core CPI to 2% as noise. Further, the FOMC, as expected, revised down its economic guidance. All these factors combined were enough to rally gold and silver. Will precious metals keep recovering? This week, several key economic reports will be released including home sales figures, GDP for Q1 (final estimate), PCE, core durable goods, consumer sentient and consumer confidence. So let’s break down the economic calendar for the week of June 23^rd to June 27^th.


Last week, gold jumped by 3.33%; the price of gold ended the week at $1,316.20/t. oz.


The price of silver also spiked by 6.58%; further, the average weekly rate was $20.16/t oz, which was 4.38% above last week’s price.



As you can see, the prices of precious metals (normalized to the end of last month) picked up the in the past few weeks. Moreover, the recent spike prices also resulted in a rise in volume of trade as indicated in the chart below.



Moving towards this week, the aftermath of the FOMC meeting could have some modest lingering effects on precious metals and the USD. Below you can find a review for the main decisions, reports and events that will come to fruition during June 23-27 and may stir up gold and silver prices.


Let’s start with the U.S:


U.S


The recent FOMC meeting seems to have a positive impact on the prices of gold and silver for the first time in a while.


The table below shows the reactions to past FOMC decisions.



In the previous five meetings the prices of gold and silver fell the day after the release of the FOMC’s decision. This time, the expected tapering of QE3, which was widely expected, didn’t adversely affected gold and silver prices. But the revised down economic outlook and dovish tone of the press release and press conference by Yellen were enough to rally gold and silver.


The FOMC meeting and the press conference showed the U.S economy might not be picking up as many had assumed it is. Yellen also referred to PCE as the estimate the FOMC reviews more closely than the CPI. This week, the PCE will be released. If the core PCE (excluding food and energy) picks up as the core CPI did, this could be a positive sign towards the progress of the U.S economy and might influence FOMC members to reconsider changing to a more hawkish tone. If PCE keeping slowly picking up at a 0.1%-0.2% pace, this could be enough to keep pulling up the prices of gold and silver: Since the FOMC isn’t likely to change its dovish tone; the current low interest rates will be enough to slowly pull up bullion rates.


The GDP estimate for Q1 2014 will be released this week. If the growth rate would be revised down again (the last estimate puts the GDP at a -1% contraction rate, which led to the revised down figures of the FOMC’s GDP growth rate for 2014), this could steer investors towards the yellow metal.


Besides the PCE report and latest GDP estimate, several other economic reports will be published including: New and existing home sales, core durable goods, consumer sentiment, and consumer confidence. If these reports show the U.S economy isn’t progressing, this could also benefit the bullion market.


During last week, the US dollar slightly depreciated against the Euro and Canadian. Nonetheless, the correlations among gold, silver and leading currencies pairs remain weak. Thus, the recent fall in value of the U.S dollar didn’t have much of an impact on gold and silver.
Europe


This week, several reports will be released including: EU manufacturing PMI, German business climate, Great Britain current account, and Germany CPI could affect the British pound and Euro. Since these currencies have kept having a weak relation with the prices of bullion during the past couple of months, they aren’t likely to have a strong effect on gold and silver.

Asia


China’s manufacturing PMI index by HSBC (preliminary estimate) will be released and could indicate the progress of China’s economy. If China’s manufacturing sector will keep picking up, this could be enough to positively impact bullion prices.


During the previous week, the Indian Rupee dropped again against the US dollar. If the rupee depreciates further, it could soften the demand for the yellow metal in India.


Finally, during last week, gold holdings of SPDR gold trust ETF slipped by 0.57%. The ETF is still down by 2.32% since the beginning 2014. Gold holdings were at 782.62 tons by the end of the previous week. If the ETF’s gold holdings keep falling, this may signal the demand for gold as an investment is softening.
Takeaway


The recent shift in the bullion market may have partly been driven by the FOMC’s latest statement and Yellen’s press conference. If the U.S economy keeps showing little progress and the core PCE remains low (well below an annual rate of 2%) this could be enough to keep slowly pushing up the prices of gold and silver.

[Samirofi]

Gold and Silver Forecast for June 30- July 4

Gold and silver slightly rose last week and thus rallied in the past four consecutive weeks. During last week, the U.S GDP growth rate was revised down to -2.9%. This news may have contributed to the recovery of precious metals prices. Nonetheless, other economic reports were mostly positive: core PCE grew again by 0.2%, month over month; new home sales increased by 18.6% during May; existing home sales also rose last month; consumer confidence index rose to 85.2 in June; jobless claims slightly fell by 2K to 312K. Alas, these news items may have slowed down the rally of gold and silver. This week, the U.S NF payroll report and ECB rate decision will be the main events. Besides them, several economic reports, decisions and speeches will come to fruition such as: BOC rate decision, Yellen’s speech, EU flash CPI, U.S pending home sales, EU monetary development, U.S, Australia and Canada’s trade balance reports, U.S and China’s manufacturing PMI updates, and jobless claims. So let’s review the economic calendar for the week of June 30^th to July 4^th.


The price of gold slightly rose by 0.29% last week. Gold ended the week at $1,320/t. oz. Silver also modestly rose by 0.75%; the average weekly price was $21.06/t oz, which was 4.43% above last week’s rate $20.16/t oz.



The chart above shows how both gold and silver rallied in the past several weeks (prices are normalized to the end of last month).


Let’s examine the main reports, events and public speeches that could impact the precious metals market during June 30- July 4 starting with the U.S economy


U.S


The main economic report of the week will be the release of the non-farm payroll report.


The table below shows the impact of the past non-farm payroll reports on the changes in gold, silver and USD/Yen currencies pairs in 2013-2014.



As you can see, the recent release didn’t have much of an effect on gold and silver prices, as the rise in employment was close to market expectations and remained well above 200K.


If the next report shows another sharp rise in employment, which will be inline with market expectations, the NF payroll report could have a modest negative impact on bullion prices.


Besides the release of this report, Janet Yellen, the Chair of the FOMC, will give a speech at the International Monetary Fund, Washington, D.C. The title of her speech is “Financial Stability”.


It’s unlikely to influence bullion investors, unless she refers to any future plans to change the FOMC policy.


Besides the NF payroll report and Yellen’s speech, several other economic updates will be released such as: pending home sales, trade balance, manufacturing and non-manufacturing PMI, and factory orders. If these reports show the U.S economy is expanding, this could curb down the rally of precious metals.


During the previous week, the US dollar moderately depreciated again against leading currencies including Yen, Euro and Aussie dollar. The correlations among gold, silver and leading currencies pairs have strengthened in recent week, but they remained weak. Thus, the recent drop of the U.S dollar didn’t have much of an effect on gold and silver.
Europe


This week, the ECB decided last meeting to cut its cash rate to 0.15% and deposit rate to -0.1%. This news, however, didn’t have much of a long term effect on the Euro. The current expectations are that the ECB will maintain its monetary policy unchanged. But if the ECB hints of any future changes to policy this could stir up the forex and commodities markets.


Besides the rate decision, the EU M3 money supply and EU retail sales update will be released this week.


Asia


China’s manufacturing PMI report will be published. The progress of the Chinese economy could indicate the potential changes in China’s demand for gold.


During last week, the Indian Rupee slightly rallied against the US dollar. If the rupee keeps appreciating, it could strengthen the demand for the yellow metal in India.


Finally, during the previous week, gold holdings of SPDR gold trust ETF rose by 0.31%. The ETF is still down by 2.02% since the start of 2014. Gold holdings were at 785.016 tons by the end of last week. If the ETF’s gold holdings start picking up, this may signal the demand for gold as an investment is recovering.

Takeaway

The rally of gold and silver prices might reach a wall this week. If the U.S economy keeps improving and the NF payroll shows a rise of over 200K jobs, this could be enough to slowly bring down precious metals prices.

[Samirofi]

Gold and Silver Forecast for July 14-18

The gold and silver market heated up last week after they didn’t do much in the previous week. The minutes of the FOMC meeting may have partly contributed to the rally of precious metals by the end of last week: The minutes revealed the FOMC may keep the interest rates for a long time until the inflation start to pick up towards the Fed’s target of 2%. This dovish tone may have sparked another rally of gold and silver. Will gold and silver keep heating up? This week, Yellen will testify; the U.S retail sales, PPI, industrial production, housing starts, Philly fed manufacturing index, UoM consumer sentiment. In Europe, EU and GB CPI, German economic sentiment, EU industrial production and Draghi’s testimony are the main weekly events. Bank of Canada will decide on its rate for this month. Finally, in China the GDP for Q2, industrial production, and new loans will be released. So let’s examine the economic calendar for the week of July 14^th to 18^th.


During last week, the price of gold increased by 1.27%; the average price reached $1,326.88/t. oz which was 0.21% above last week’s average. Gold ended the week at $1,337.4/t. oz.


Silver also rallied by 1.54%; further, the average weekly rate was $21.19/t oz, which was 0.31% above last week’s rate.


Let’s review the main reports that could impact the precious metals market during July 14-18


U.S


The minutes of the recent FOMC meeting may have provided some backwind to the bullion market even though they had little impact on the USD.


The dovish tone in the recent minutes along with Yellen’s comments in the last press conference may have been enough to drive up gold and silver prices. From the minutes of the recent FOMC meeting:


“The Committee again stated that it currently anticipated that it likely would be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continued to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remained well anchored.”


The phrase “considerable time after the asset purchase program ends” suggests it could be more than a few months until the FOMC starts to raise its cash rate. As long as the market expectations are for no change in the Fed’s cash rate, this may benefit the bullion market by keeping investors in gold and silver – metals that are considered safe haven. Do these metals serve as safe haven? Is the Fed’s policy likely to lead to a spike in inflation in the near term? In my opinion the answer to both questions is no.


But for near future, these developments are likely to benefit the yellow metal.


This week, Yellen’s testimonies before the Senate Banking Committee and House Financial Services Committee during this week could pressure further up the prices of gold and silver. Yellen’s statements in the past FOMC meeting press conference and the minutes seem to have a positive impact on precious metals.


Moreover, several economic reports will be released including Philly fed index, housing starts, building permits, retail sales, industrial production, and UoM consumer sentiment. These reports estimate the progress in consumer spending, manufacturing and housing. If these three aspects of the U.S economy picks up, it could influence the FOMC members in the coming meetings. Also, a recovery of the U.S economy could steer investors towards equities and away from bullion.


During last week, the US dollar slightly depreciated against the Yen and Aussie dollar. It remained nearly flat against the Euro. The correlations among gold, silver and leading currencies pairs have moderately strengthened again last week, but they remained weak.


China


In China several key economic updated will come out this week including: GDP for the second quarter, new loans and industrial production. Since China took the lead from India as the world largest importer of gold, the progress of this economy could hint of the direction of the demand for gold in China is heading. If China’s economy doesn’t pick up, this could impede the growth in demand for bullion.


Finally, during last week, gold holdings of SPDR gold trust ETF rose again by 0.46%. The ETF is still down by 0.15% since the beginning of the year. Gold holdings were at 800.047 tons by the end of last week. If the ETF’s gold holdings keep rising, this may signal the demand for gold as an investment is strengthening.
Final note


Gold and silver are getting back-wind from the dovish policy of the FOMC, which could keep pulling up the prices of gold and silver this week. Even if the Chinese economy doesn’t show much progress, it will only play a modest secondary role in impacting the bullion market. Finally, if the U.S economy keeps recovery, this could pull up equities and thus curb down the rally of gold and silver.

[Samirofi]

Gold and Silver Forecast for July 28-August 1

Silver and gold resumed their downward trend during most of last week. The recovery of the USD against leading currencies may have contributed to the decline of precious metals. The lack of growth in the U.S equities and the drop in U.S home sales didn’t pull up by much bullion prices by the end of last week. This week, the FOMC will convene again and decide of any changes to policy. In addition, the main U.S economic reports include: Non-farm payroll report, GDP for the second quarter, consumer confidence, manufacturing PMI, PCE, and pending home sales. In Europe, Germany’s retail sales, unemployment and CPI will be released. EU’s flash CPI will also come out. Finally, China’s manufacturing PMI will be released. So let’s review the economic calendar for the week of July 28^th to August 1^st.


The FOMC members will meet in a two day session, in which they will decide of any changes to policy. The current expectations are that the FOMC will taper again QE3 by another $10 billion. In the past, this news tended to have a negative impact on the bullion market, which is likely to be the case this time as well. Nonetheless, the impact this news has had on precious metals has diminished in recent meetings. Further, the last meeting had a dovish tone, which resulted in a rise in gold and silver prices.


Besides the FOMC meeting, the non-farm payroll report will be released at the end of the week. If the report shows another sharp gain in employment of well above 200K, this could have a negative effect on gold and silver, as it used to have in the past.




The U.S PCE will refer to June’s figures and could serve as another indication for the progress of the U.S inflation. If the PCE continues to pick up, this may have a positive impact on gold and silver, as indicated in the chart below.



The GDP for the second quarter and manufacturing PMI will be published. They could drag down gold and silver if they meet or exceed the market expectations.


During last week, the US dollar mostly appreciated against the Euro and Yen. If the USD continues to pick up, mainly as the upcoming economic reports show higher than expected results, it could bring down gold and silver.


Finally, during last week, gold holdings of SPDR gold trust ETF change direction and fell by 0.41%. The ETF is up by 0.08% since the beginning of the year. Gold holdings were at 801.844 tons by the end of last week. If the ETF’s gold holdings continues to fall, this may signal the demand for gold as an investment is diminishing.


Bottom line

The tensions in the Middle East and between Russia and U.S could raise the risk level in the markets, which could play in favor of the bullion market. Further, the volatility is likely to pick up. But last week’s fall in gold and silver could resume, if the U.S reports show higher than anticipated results and the FOMC keeps tapering its asset purchase program.

[Samirofi]

Gold and Silver Forecast for August 4-8

Precious metals fell again during last week until Friday when the non-farm payroll report showed a gain of 209K in jobs – less than market expectations. Earlier this week, the FOMC decided to taper again its QE3 program and had a slightly more hawkish tone to its press release. The GDP for the second quarter was also published and presented a gain of 4% – a 180 degree shift from the first quarter. These news items may have been enough to pressure down precious metals prices. But how will this week play out? This upcoming week, the ECB will decide on its interest rate for August. In Japan, Australia and England the central banks will also convene to decide on their respective cash rate. In the U.S the trade balance, jobless claims and trade balance reports will be out. In Europe, Germany’s factory orders, trade balance and EU retail sales will be released. Finally, China’s PI and trade balance will be published. So let’s examine the economic calendar for the week of August 4^th to August 8^th.


The FOMC meeting concluded with little surprises as it decided to cut down its asset purchase program by another $10 billion to $25 billion a month. The ongoing drop in the asset purchase program and the slightly more hawkish wording in the recent press release seem to be enough to bring back down gold and silver prices, as indicated in the table below.





The GDP for the second quarter was also out and showed a sharp gain in GDP of 4% during the past quarter. This number was higher than anticipated and thus provided some backwind for U.S equities and drag down precious metals prices. But as stated earlier the rise in employment of “only” 209K may have been enough to bring back precious metals enthusiasts to their bullion positions.


Despite the market’s reaction, the U.S labor market is still progressing at a solid pace. If the U.S NF payroll keeps showing a higher than 200K gain in jobs, this could be enough to slowly drag down precious metals prices in the coming months. It seems the deviation from market expectations, however, play a role in the direction of bullion prices on the day of the release of the NF payroll monthly update.


This week, the main U.S reports are related to the trade balance, factory orders and jobless claims; they are likely to have little impact on bullion prices.


During last week, the US dollar appreciated again against the Yen, Canadian dollar and Aussie dollar. If the USD continues to rally, mainly as the upcoming economic reports show higher than expected results, it could further pressure down gold and silver.


In Europe, the ECB will decide on its interest rate for August. The ECB isn’t likely to change its policy in the upcoming meeting, but the press conference with ECB Draghi could stir up the forex markets if he were to refer to any potential changes to ECB’s monetary policy in the coming months or any shift in ECB’s outlook on the progress of Europe’s economic progress.
Finally, during the previous week, gold holdings of SPDR gold trust ETF remained unchanged. The ETF is up by 0.08% since the beginning of 2014. Gold holdings were at 801.844 tons by the end of last week. If the ETF’s gold holdings resumes its downward trend, this may signal the demand for gold as an investment is falling.

Takeaway

The recovery of gold at the end of last week may continue at the beginning of this week, but the general downward direction of gold and silver is likely to progress on at a slower pace on a weekly scale.

[Samirofi]

Gold and Silver Forecast for August 11-15

Gold changed direction and bounced back mainly on Wednesday, while silver dwindled on a weekly scale. Moreover, on a monthly scale gold is up by over 2% and silver is down by a similar rate (up to date). What is up ahead for gold and silver? This week, the GDP for leading economies including Japan, Germany, and Great Britain will be released. In the U.S PPI, retail sales, industrial production JOLTS, jobless claims and consumer sentiment reports will be published. Finally, in Europe, Germany’s economic sentiment and GB’s inflation report may move the local markets. So let’s analyze the economic calendar for the week of August 11^th to August 15^th.


This week, the main U.S report is the JOLTS report, which is considered a complementary monthly update to the non-farm payroll report. This is another key figure to examine the progress in the labor market and is highly regards among FOMC members. If the report shows little progress in the number of job opening, this could suggest the growth in the labor market isn’t picking up. In such an event, this could bring down USD and thus pull up gold and silver.


Other U.S reports include retail sales, industrial production and consumer sentiment; they are likely to have little impact on precious metals prices.


The PPI is another indication for the movement in the inflation in the U.S. If this report shows the core PPI is raising; this could be another indication for the rise in inflation pressures. The rise in inflation could increase the demand for gold investments, but this could also improve the odds of the FOMC raising the cash rate – a decision that won’t benefit the bullion market.


In the meantime, the gold reserves in Russia and Turkey have picked up in the past month, as indicated in the table below.




Despite the rise in demand for gold in certain central banks, the demand for gold in the private sectors seems to have contacted in the past several weeks.




The chart above shows the changes in the amount of gold in the GLD ETF, which is the world’s largest gold ETF. Gold holdings were at 795 tons by the end of last week. This recent fall implies the demand for the yellow metal as an investment has diminished.


But investing in gold ETFs such as GLD isn’t only one option for investing in gold – check out several other options we discussed in a recent podcast.


During last week, the US dollar moved in an unclear trend as it rose against the Euro and Canadian dollar and fell against the Yen and Aussie dollar. If the USD resumed its rally again, mainly as the upcoming economic reports show higher than expected results, it could drag down gold and silver.


In Europe, the ECB will decide on its interest rate for August. The ECB isn’t likely to change its policy in the upcoming meeting, but the press conference with ECB Draghi could stir up the forex markets if he were to refer to any potential changes to ECB’s monetary policy in the coming months or any shift in ECB’s outlook on the progress of Europe’s economic progress.


Takeaway

The detachment of gold and silver isn’t likely to last long so we could see these precious metals move in the same direction again. But this week’s economic reports aren’t likely to stir up the markets so we could see little movement in the precious metals markets with a modest downward trend for gold and silver.

[Samirofi]

Gold and Silver Forecast for August 18-22

Precious metals resumed their downward trend last week, while the USD and U.S equities rallied. Nonetheless, gold price is still up by 1.8% during August, up to date, but silver is down 4.3%. This week, the minutes of the FOMC meeting to be released on Wednesday and the Jackson Hole Economic Symposium on Thursday and Friday could provide some volatility in the markets. Several economic reports will also come out this week including CPI, housing figures and Philly fed index from the U.S, BOE rate decision and CPI from Great Britain, Japan’s trade balance, China’s manufacturing PMI, and retail sales and CPI from Canada. So let’s break down the economic calendar for the week of August 18^th to 22^nd.


This week, the main U.S related report will be the release of the minutes of the last FOMC. In the past meeting, the decision followed with a drop in bullion prices. The tone of the press release of the past few meeting seem to shift from dovish to hawkish resulting in a zigzag in the bullion markets following the releases. Perhaps the minutes of the FOMC will release some more hawkish tone, which could bring further down precious metals prices.


In any case, all eyes are headed towards the FOMC meeting in September, which will also have a press conference and could be the one, in which FOMC chair Yellen offers some more information regarding the next rate hike. The current estimates range mostly between the end of the first quarter of 2015 and the end of the second quarter.


The market also seem to estimate, based on the pricing of short term bond rates, further down the road additional rate hikes at a rate of 25pp nearly every Fed meeting, so that the cash rate could reach close to close to 1% by the end of 2015.


These estimates are likely to vary a lot over the coming months and until then, the first rate hike will likely to have a strongest impact on the markets- such a shift isn’t likely to do well for bullion and bring down their prices even further.


Other U.S reports include CPI, existing home sales, housing starts, building permits, and Philly fed index; they are likely to have little impact on bullion prices.


The CPI is a key indication for the progress of the U.S inflation. In the past report, the core CPI reached 1.9% (annually), which is very close to the Fed’s target inflation. If this report shows the core CPI continues to pick up; the rise in inflation could pull up the demand for gold investments, but could also improve the chances of the FOMC raising the cash rate sooner rather than later; the Fed’s decision to raise its cash rate is likely to have a negative impact on bullion prices.


In the meantime, the demand for gold as an investment seems to fall as the amount of gold in the GLD ETF, which is the world’s largest gold ETF has slipped in the past week. The current gold holdings are at 795.597 tons by the end of last week – nearly 0.78% fall since the beginning of the month. This fall suggests the demand for the yellow metal as an investment has diminished.


During last week, the US dollar slightly rallied against the Euro and Yen. If the USD continues to slowly pick up, this turn of events could also pressure down gold and silver.


Takeaway


The recent weakness in the bullion market is likely to keep coming down at a slow pace, especially if the upcoming minutes of the FOMC meeting will present a hawkish tone.

[Samirofi]

Gold and Silver Forecast for August 25-29

Precious metals prices fell again last week, as the USD pulled up. This week, the GDP for Q2 and PCE will be release in the U.S, which could impact the bullion market. The recent Jackson Hole Symposium ended with Yellen stating again the labor market still has room for recovery, but also left the door open for a cash rate increase at a sooner than expected time. So let’s break down the economic calendar for the week of August 25^th to 29^th.


This week, the upcoming GDP for the second quarter and PCE reports will be the main economic publications that could move the bullion market.


For the GDP, in the first estimate, the GDP grew by 4.1%. This upcoming estimate, analysts suspect little change as it could come down to only 3.9%. But if the GDP shows a harsher fall and comes down even further, this could pull back up the price of gold. In such a case, silver is likely to follow.


The second report is the PCE, which is another index that estimates the development in the US inflation. In the previous estimate, the core PCE, which excludes energy and food prices, reached an annual rate of 1.5% – nearly unchanged from its past update. The current inflation target is still higher at 2%. So if the inflation picks up, in this report, this could bring up the odds of the FOMC raising the cash rate before the current market expectations of mid-2015. In such a case, this could negatively impact the bullion market over the short term.


Other U.S reports will come out this week including core durable goods, consumer sentiment, pending and new home sales, housing; they are likely to have little impact on precious metals prices.


In the meantime, the demand for gold as an investment changed direction and rallied as the amount of gold in the GLD ETF, which is the world’s largest gold ETF grew in the past week. The current gold holdings are at 800.085 tons by the end of last week – nearly 0.56% from last week but still down by 0.22% since the beginning of the month. This recent rise suggests the demand for the yellow metal as an investment has slightly improved.


The U.S equities are recovering as the S&P500 index rose by 3% since the beginning of August. If the stock markets keep picking up, this could steer more investors away from bullion and into equities.


During last week, the US dollar rallied against the Euro and Yen. If the USD continues to strengthen, this turn of events could further bring down gold and silver.


Takeaway

The upcoming GDP and PCE reports could have some short term effects on bullion prices, but the weakness of precious metals could continue as the USD rallies and the US equities recovers.

[Samirofi]

Gold and Silver Forecast for September 1-5

The prices of gold and silver didn’t do much last week as they edged up on a weekly scale. But September is starting off with rate decision by ECB, BOE, BOC, RBA and BOJ. The main event will be the ECB rate decision and press conference. In the U.S, the non-farm payroll report will be released on Friday and could stir up the bullion market. Other major reports include factory orders, manufacturing and non-manufacturing PMI reports. So let’s analyze the economic calendar for the week of September 1^st to 5^th.


Gold and silver inched up by 0.6% and 0.2%, respectively. On a monthly scale gold slightly increased by 0.4%, while silver prices dropped by 4.8%. But precious metals could resume their downward trend this week on account of the upcoming reports to be released most notably the NF payroll report.


The current projections are for another strong monthly gain of over 200K (estimates are at 222K). If the report shows a higher than expected gain, this report could bringing down precious metal prices.


Several additional economic reports will be released in the U.S including factory orders, manufacturing PMI and non- manufacturing PMI. These reports could also provide additional information regarding the progress of the U.S economy. Currently, market estimates show the manufacturing PMI and non- manufacturing PMI are to slightly fall from last month’s levels. But if these reports turn out positive and beat market expectations, they could also slightly drag down gold and silver.


Last week, demand for gold as an investment changed direction again and fell as gold hoards in the GLD ETF, which is the world’s largest gold ETF dropped. The current gold holdings are at 794.999 tons by the end of last week – nearly 0.64% below the previous week and down by 0.85% since the beginning of August. If gold hoards resume their downfall, this could signal the demand for gold as an investment is diminishing.


The US dollar kept recovering against the Euro and Yen. The upcoming ECB rate decision could bring further down the Euro against the USD especially if ECB President Draghi offers some more information about the monetary steps the ECB wishes to take in order to pull up the EU from its current stagnation. Last week’s flash CPI was inline with projections of an annual rate of 0.3% – still a long way from the 2% target the ECB holds. Thus, if the USD strengthens again against the leading currencies, this could further bring down gold and silver.


The U.S equities continue to rally as the S&P500 index added 3.7% in August. If the stock markets keep recovering, this could steer more investors away from precious metals and into equities.


Takeaway

The upcoming NF payroll report and the ECB rate decision could bring up the USD and drag down precious metals. But we aren’t likely to see big moves on a weekly scale. The next FOMC meeting later this month could bring back the volatility of precious metals.