Gold and Silver Weekly Outlook

[Samirofi]

Gold and Silver Forecast for September 8-12


Precious metals, much like other commodities, kicked off last week with a plunge in prices. As the week progressed, bullion prices remained relatively flat even after the ECB surprised the markets with a rate slash and promise of an ABS program. Moreover, the latest NF payroll report fell short of market expectations, but wasn’t enough to pull up precious metals prices. This week, the main reports from the U.S are the JOLTS monthly update and retail sales. In China, several reports will come out including CPI, new loans and trade balance. So let’s breakdown the economic calendar for the week of September 8^th to 12^th.


Gold and silver prices dropped by 1.6% and 1.7%, respectively. The recent NF payroll report showed only a 142K gain in jobs – well below the market projections of 222K jobs. But the unemployment rate inched down to 6.1% as number of employed fell, while number of people participating in the labor market rose. The next JOLTS report will complete the picture of the progress in the labor market. If the number of job openings reached 4.67 million – a modest gain from the preceding month. The current projections are for 4.72 million job openings. If this number falls short, this could indicate the labor market isn’t progressing faster and thus may bring back up gold and silver prices.


Besides this report, the retail sales report will also come out and show of any growth in the retail market. This could serve as another indicator for the developments in the U.S market. The current projections are for a 0.2% gain in core retail sales.


Last week, demand for gold as an investment tumbled down as gold hoards in the GLD ETF, which is the world’s biggest gold ETF fell. The current gold holdings are at 785.725 tons by the end of last week – nearly 1.17% below the previous week and down by 2% since early August. If gold hoards keep falling, this could signal the demand for gold as an investment is softening.


The recent decision of ECB to slash again its cash rate dragged down the Euro/USD to below 1.3. Last week, the USD rallied against the Euro and Japanese yen, which seem to have had a modest impact on the prices of bullion. In any case, if the USD continues to strengthen against leading currencies, this could adversely impact gold and silver.


The U.S equities slightly rose as the S&P500 index added 0.2% in the past week. If the stock markets resume their upward trend, this could steer more investors into equities.


Takeaway


The bullion market is likely to slow down in the coming days and the prices could show a modest recovery especially if the upcoming JOLTS reports come short of current projections.

[Samirofi]

Gold and Silver Forecast for September 15-19

Precious metals, much like crude oil, resumed their downfall. This week, the main reports from the U.S are the upcoming FOMC meeting and press conference, Philly Fed index, PPI and CPI, FOMC Chair Yellen speaks, industrial production and housing figures. In Europe the main item on the agenda is the Scottish referendum. Besides this event several reports will be published including GB CPI, German ZEW economic sentiment GB employment report, G20 Summit. But for bullion, the main show will remain in the U.S around the next FOMC meeting. So let’s breakdown the economic calendar for the week of September 15th to 19th.

Gold and silver prices continued to fall; last week, they shed 2.84% and 2.87%, respectively, off their value.

Their recent fall coincided with the weakness in the oil market, and the ongoing recovery of USD. Despite this fall, the demand for gold as an investment rallied as gold hoards in the GLD ETF, which is the world’s biggest gold ETF slightly increased last week. The current gold holdings are at 788.404 tons by the end of last week – nearly 0.34% above the previous week but still down by 1.6% since early last month.

The main event of the week will be the upcoming FOMC meeting, in which the Fed may provide some additional information about its future steps including the rate hike and exit strategy – two issues that could stir up the markets. Also, the FOMC will update its economic outlook and Chair Yellen will hold a press conference following the release of this update. It’s expected that the FOMC taper again its seventh QE3 program by $10 billion to $15 billion a month.

But the timing of raising the cash rate remains unclear and FOMC Chair Yellen is likely to keep this issue in the air due to potential adverse impact this news could have on the markets. Moreover, the past two NF payroll reports weren’t too impressive, which may keep the announcement over the next rate hike unknown.

Nonetheless, Yellen could talk about the exit strategy following the huge rise in the Fed’s balance sheet from its QE programs. In six out of the past seven meetings, the bullion market reacted negatively to the FOMC’s press release.

In most cases, the tone was slightly becoming more hawkish and raised the expectations of rate hike next year. But if this upcoming FOMC statement and press conference turn more dovish, it could pull back up bullion prices – even if for a short term. My guess, however, Yellen won’t provide more information about the rate hike, and the tone of the statement won’t change much – this is likely not to play in favor for precious metals.

Besides this news, the Scottish referendum will take place week. It will revolve about whether Scotland should seek independence. This news doesn’t have a direct link to bullion, but it could stir up the British pound in particular and the forex markets in general. This could also have some ripple effect on other related markets such as commodities.

The U.S equities slightly fell as the S&P500 index dropped by 1.1% in the past week. If the stock markets resume their upward trend, this could steer more investors into equities and away from bullion.

Takeaway

My guess: The bullion market is likely to resume its downward trend by the end the week.

[Samirofi]

Gold and Silver Forecast for September 22-26

Gold and silver took another tumble as both bullion prices: For gold, it reached its lowest level since the beginning of the year; silver came down below $18 for the first time since August 2010! The latest FOMC meeting had a slightly more hawkish tone than expected albeit no major headlines were released. The other big news item from the week was the Scottish referendum that concluded with Scotland remaining as part of the UK. The sharp gain in the U.S dollar, following these events, was enough to weaken not only precious metals but also other commodities including oil and natural gas. This week, the main reports from the U.S are the monthly update of the core durable goods, home sales data, and last update of the GDP for the second quarter. In Europe the flash manufacturing PMI reports for Germany and France will come out along with German Ifo Business Climate Index. ECB President Draghi will testify before the European Parliament’s Economic and Monetary Committee. Finally, China’s flash manufacturing PMI will be released earlier in the week. So let’s review the economic outlook for the week of September 22^nd to 26^th.


The latest FOMC meeting provided some headlines such as an end to QE3 program in October; the median federal fund rate estimate for the end of next year was revised up; another member in the FOMC turned in favor of explaining the term “considerable time”.


Alas, all these little headlines didn’t deal head on with the uncertainty around the timing or the pace of the rate hikes expected to come up next year. Nonetheless, these turn of events were enough to drag down precious metals: Gold and silver prices took another nose dive; last week, they fell by 1.21% and 4.13%, respectively.


Their recent fall coincided with strong demand for USD. Further, the demand for gold as an investment declined — gold hoards in the GLD ETF, the world’s biggest gold ETF, fell last week. The current gold holdings are at 7767.404 tons by the end of last week – nearly 1.5% below the previous week and down by 2.33% since the beginning of the month.


The main event of the week will be the economic reports on the progress of the U.S economy including core durable goods and last update of the GDP for the second quarter: In the previous month, manufactured durable goods grew by 22.6% to $300.2 billion back in July, and all manufacturing industries excluding transportation fell by 0.8%. This time, the current estimates for a gain of 0.7% in manufacturing industries excluding transportation.


The GDP in the previous estimate for the second quarter reached 4.2% — slightly above the first estimate and much better than in the first quarter. Back then, the U.S GDP contracted by 2.9%. The current estimates are that the GDP will slightly rise to 4.6%. If this estimate is beaten and the GDP report shows a higher gain, this could have modest positive impact on the US dollar. The same goes for the core durable goods report. In such a case, precious metals could resume their downward trend.


A couple of housing sales figures will come out this week as well. They may also have a modest impact on the forex markets and consequentially precious metals.


The U.S equities also rallied last week as the S&P500 index rose by 1.2% in the previous week. If the stock markets keep recovering, this could steer more investors into equities and away from precious metals.


Takeaway


My guess: Precious metals are likely to keep falling down at a slower pace.

[Samirofi]

Gold and Silver Forecast for October 6-10

The latest positive news from the U.S labor market – the NF payroll showed 248K jobs added during September and August numbers were revised up to 180K – was enough to drag down the prices of gold and silver to a new low. Gold fell below $1,200 and silver below $17. These selloffs were didn’t vote well for the progress of bullion in the near future. This week, the main reports from the U.S that could move precious metals are JOLTS reports and minutes of the FOMC meeting. Besides these reports, we also have 3 rate decisions in Japan, England and Australia. Additional reports include China’s new loans, Canada’s employment update, Germany factory orders, and GB manufacturing production. So let’s examine the economic outlook for the week of October 6^th to 10^th:


To complete the picture of the NF payroll report, the JOLTS report will provide another aspect of the labor market from the demand side. It will show if there were any changes in the job openings, hires, and separations. As of last month, there were 4.7 million job openings nearly 22% higher than the same month last year. The current expectations are for a modest gain so that the number will rise to 4.71. If job openings don’t pick up, this could curb down a bit the recent USD rally.


But the main report of the week will revolve around the minutes of the FOMC. Last time, the FOMC members appeared to be slowly leaning more towards raising the cash rate next year a faster than previously expected rate. The importance of the minutes is to examine the general tone of the last meeting, and see if the minutes could offer more insight behind the last decision and future monetary steps.


Last time, following the release of the minutes, precious metals took a tumble the following day. It seems that with every meeting, the members are slowly shifting towards taking more hawkish steps. If this report shows a similar hawkish shift, this could result in another beating for gold and silver.


The forthcoming rate decisions aren’t likely to be too dramatic as BOJ, BOE and RBA aren’t likely to change their respective policy this week. But any changes to guidance or voting that isn’t unanimous could stir up the forex markets.


Following the recent fall in prices, the demand for gold as an investment shark again — gold hoards in the GLD ETF, the world’s biggest gold ETF declined to 767.5 tons by the end of last week – nearly 0.6% below the previous week and down by 3.5% since the end of August.


In the meantime, the ongoing recovery of USD against leading currencies didn’t help commodities including gold and silver. If the USD keeps rising, this could also reduce gold and silver’s shine as an investment.

Takeaway


My guess: Precious metals may see a modest gain as a correction for last week’s sharp losses, but gold and silver are likely to keep coming down on a weekly scale.

[Samirofi]

Gold and Silver Forecast for October 13 -17

It seems the market was waiting for an excuse to start selling off the U.S dollar after it had spiked in the recent weeks against the Euro, Yen and Aussie dollar. Last week, the minutes of the FOMC meting provided the excuse to start selling U.S dollar, after the FOMC members voiced their concerns about the progress of the U.S dollar and the economic slowdown in the rest of the world. This turn of events also provided backwind for the latest recovery of gold and silver prices, after they tumbled down a week earlier. This week, the main economic updates from the U.S that will be released include: Retail sales, PPI, housing starts, UoM consumer sentiment and Philly fed survey. Chair of the FOMC Yellen will also give a speech on Friday. In Europe, the German ZEW economic sentiment, GB employment update, and EU CPI will be published. China’s trade balance and CPI will also come out. So let’s review the economic outlook for the week of October 13^th to 17^th:


The minutes of the last FOMC meeting didn’t provide a clear direction from the hawks or the doves of the FOMC. We had it all there. This includes opinions from both sides. Nonetheless, the market seems to have reacted more to the members that voiced their concern about the progress of the U.S dollar in the past few weeks. They also stated their concern about the developments in other leading economies including China, EU, and Brazil. In total, this news along with the revised down IMF global economic projection was enough to bring down gold and silver prices.


This week, the main economic reports from the U.S relate to prices (PPI) consumer sales (retail sales consumer sentiment), output (Philly fed index) and housing (housing starts). If these reports meet their current projections and show signs of progress in the U.S economy, this could provide enough backwind for the U.S dollar to resume its rally. Moreover, they could also drag further down precious metals prices.


Despite the recent recovery in the price of gold, the demand for gold as an investment seem to have contracted again — gold hoards in the GLD ETF, the world’s largest gold ETF fell to 759.44 tons by the end of last week – nearly 1.05% below the previous week and down by 4.5% since the beginning of last month.


Finally, the recent dive the U.S stock market took as the S&P500 fell by 3.1% last week. This recent market reaction also coincided with the rally of GLD and SLV. If the U.S equities change course and bounce back next week, this may also coincide with GLD and SLV’s downward shift.


Final note

My guess: Precious metals are likely to resume their downward trend especially following last week’s modest gain. If the U.S dollar resumes its recovery, gold and silver are also likely to be adversely impacted by this turn of events.

[Samirofi]

Gold and Silver Forecast for October 27 -31

The recent recovery of the U.S. dollar along with the rally of U.S. equities provided the proper climate to see gold and silver fall down. Moreover, the latest interview given by Bullard gave the necessary excuse to keep the speculations around the FOMC’s next meeting. This also allowed easing down on the hawkish tone of the FOMC from the past meetings. This week the FOMC will convene for its penultimate meeting for the year. The GDP for the third quarter – first estimate will also be released and could crowd out the impact the FOMC statement may have on the bullion market if the GDP doesn’t meet market expectations. In Asia, BOJ’s rate decision and China’s manufacturing PMI will be the main focus. In Europe, ECB’s stress tests results will be released along with EU monetary developments, flash CPI and unemployment rate. So let’s review the economic outlook for the week of October 27^th to 31^st:


The FOMC will hold its meeting on October 28-29. The statement of the meeting is expected to announce the end of QE3. If Bullard were able to shift the tides in the FOMC and persuade Yellen to keep the QE3 at its current pace – as an open end purchase program, this could have a positive impact on gold and silver prices. Keep in mind, however, this scenario isn’t likely.


As you can see, in the past couple of meetings, gold and silver had a strong negative reaction to the releases. Moreover, outside the June meeting, gold and silver most came down the following day of the release during this year. Unless, the wording changes in the upcoming statement, the reaction is likely to remain the same – gold and silver slowly come down.


U.S. GDP for the third quarter will also be released on Thursday. In the last estimate the U.S GDP grew by 4.6% in the second quarter. If the US gross domestic product doesn’t pick up, this could reduce the odds of the FOMC turning more hawkish and thus pull up gold and silver; the current estimates are for the GDP to grow by 3.1%. Anything lower than this number and we may see bullion prices rally.


The personal consumption expenditures index is another measure the FOMC follows to assess the U.S. inflation. Last month, the core PCE (excluding food and energy) edged up by 0.1%. On an annual rate, the core PCE rose by only 1.5% – still well below the 2% target. If the inflation starts to rise, this could positively impact gold and silver prices.


Following China’s GDP report from last week, the manufacturing PMI will be next for the week. If it shows little progress, then this could suggest China’s economy, while still growing (as the PMI is expected to remain at 51.1), isn’t growing any faster. This turn of events isn’t likely to help pull up gold and silver.


During last week, the demand for gold as an investment sharply declined — gold hoards in the GLD ETF, the world’s largest gold ETF fell to 745.38 tons by the end of last week – nearly 2% below the previous week and it’s also down by 3.5% since the beginning of the month.


Finally, the recent recovery the U.S stock market experienced as the S&P500 rose by 4.1% last week. This recent market reaction also coincided with the drop of GLD and SLV. If the U.S equities keep recovering, this may also coincide with GLD and SLV’s decline.

Takeaway

My guess: The FOMC won’t present any major changes so QE3 will end, which is likely to bring further down gold and silver. But the U.S. GDP for the third quarter could shuffle the cards and pull back up gold and silver in the unlikely, yet very plausible, event of GDP falling well below 3% – say 2%-2.5%. Bottom line: I suspect precious metals will resume their downward trend.

[Samirofi]

Gold and Silver Forecast for November 24-28

The prices of gold and silver recovered again in the past week mainly by the end of the week following the recent decision from Beijing to slash the interest rate in order to deal with the economy’s sluggish growth rate in recent quarters. The FOMC released the minutes of the last meeting and didn’t provide big headlines or change its hawkish tone enough to pull back up precious metals. This week, before the U.S. holidays start, the main reports to come out include: Third quarter GDP, core PCE, core durable goods, new and pending home sales, and consumer confidence. Other events and reports include: German business climate, EU monetary developments, EU flash CPI and unemployment update, Australia Private New Capital Expenditure, and Canada’s GDP. So let’s breakdown the economic outlook for the week of November 24^th to 28^th:


The minutes of the FOMC meeting didn’t provide any big headlines as the hawks remained in the charge. The FOMC members talked about the potential slowdown in China, Japan and Europe but didn’t think it will have a strong adverse impact on the U.S. They also voiced limited concern over the U.S. inflation, but not enough to do something about it. For now, these issues suggest the FOMC may start to turn more hawkish in the near term, which could bring down in bullion prices. The next FOMC meeting in December could provide the much needed fireworks.


This week, the U.S. GDP for the third quarter will be released. This will be the second estimate. In the first estimate, the report came out higher than expected at 3.5%. This time, the expectations are for the GDP to inch down to 3.3%. If the report shows a higher growth rate, this could contribute to the decline in gold and silver prices.


Besides the GDP, several other reports will be released including housing sales. The progress in the housing market could also provide another indication for the growth in U.S economy. The core PCE will also be published and it’s another key indicator for the progress in the U.S. inflation. The FOMC follows this report and if it shows a higher than anticipated growth rate in the core PCE, this could pull back up gold and silver prices.


In Europe, the EU flash CPI, monetary developments, and unemployment reports will be released this week. The progress of Europe could determine the direction of the Euro/USD.

During last week, gold holdings in the GLD ETF, the world’s leading gold ETF, only inched up to 720.914 tons by the end of previous week –a 0.04% gain; it’s still 6.6% lower than its levels recorded at end of September.


The U.S. dollar rose against the Euro, Aussie dollar Yen. If the U.S. dollar were to keep going up against other currencies, this could pressure down precious metals.


Takeaway

The recent recovery in the gold and silver market may have partly been due to the recent news from China, which coincided with the rally of other leading commodities prices such as crude oil and natural gas prices. The upcoming GDP and PCE reports could play a role in the direction of gold and silver. If they meet or exceed market expectations, precious metals could pull back down – my guess, this is a more likely scenario. Otherwise, gold and silver may resume their slow recovery.

[Samirofi]

Gold and Silver Forecast for December 1-5


The recovery of precious metals came to halt last week as both gold and silver prices tumble down by around 2% and 5%, respectively. This week the main report of the week is the NF payroll report, which could impact the direction of gold and silver. Also, ECB will announce of any changes to its rate and monetary policy. Besides these issues, this week, other events and reports include: U.S. manufacturing PMI, factory orders, trade balance, China’s manufacturing PMI, Australia’s GDP for Q3, MPC, RBA and BOC rate decisions, and Germany’s factory orders. So let’s breakdown the economic outlook for the week of December 1^st to 5^th:


The recent cool down in the precious metals market coincided with the drop of other commodities prices such as crude oil. U.S. dollar slightly weakened against leading currencies such as yen and Euro.


This week, however, the direction of precious metals may be impacted by the release of the NF payroll report.




The table above presents the relation between gold and silver to changes in NF payroll during the past couple of years.


As you can see, precious metals tend to have a negative relation to U.S. employment especially when the number of jobs added comes short of expectations. Last time, the NF payroll report was positive with a gain of 214K jobs but was lower than expected so that gold and silver had a positive reaction.


This week, the current estimates are for a gain of 225K. A lower growth rate could result in another bounce in precious metals prices.


This week, the manufacturing PMI report will be release and could provide additional information regarding the progress of the manufacturing sector. Keep in mind, however, this report seems to have a smaller impact on the bullion market than the NF payroll. In any case, the current expectations are for a fall in the PMI to 57.9 – in the previous month the number was at on 59. If the number falls below the current projections, this may adversely impact commodities prices including gold and silver.


Besides the U.S. manufacturing PMI, factory orders and trade balance reports will be released. These are additional reports that could impact the direction of the U.S. dollar.


In Europe, the ECB will announce of any changes to its policy. ECB President could provide some additional guidance about the ECB’s asset purchase program; if so, his words could bring further down the Euro against the U.S. dollar, which could be another pull back for precious metals.


In China, the manufacturing PMI reports by China and HSBC will come out. The progress of China’s economy is another factor to consider its impact on the demand for commodities including gold and silver.


Earlier this week, the Swiss referendum concluded with voters overwhelmingly declined a proposal to boost central bank gold reserves, which is likely to have provided another reason for a tumble in gold and silver prices at the beginning of the week.


During last week, gold holdings in the GLD ETF dropped again to 717.627 tons by the end of previous week –a 0.46% fall; it’s also 7.1% lower than its levels recorded at end of September.


Takeaway

The weakness in the bullion market is likely to continue especially if the U.S. economy keeps showing signs of recovery. Any short comings could result in a short term bounce back in gold and silver prices but the general direction is likely to remain downwards.

[Samirofi]

Gold and Silver Forecast for December 8-12

The bullion market showed high volatility as gold and silver rallied during most of the week until the end when the non-farm payroll report showed a higher than expected gain in number of jobs. This week the JOLTS report will be released and will provide another indicator for the U.S. labor market’s status. In Europe the second LTRO will be the main event of the week and could impact not only the Euro but also commodities prices. Besides the above-mentioned events, this week include: U.S. retail sales, EU industrial production, China’s new loans and CPI, U.S. PPI, Japan’s GDP for Q3, and U.S. consumer sentiment. Here is the economic preview for December 8^th to 12^th:


Last week’s recovery came after the gold and silver tumbled down a week earlier. This modest gain could change course again especially in times of high volatility as presented in the foreign exchange and commodities markets. This rally also changed course on Friday following the better than expected NF payroll report, in which 321,000 jobs were added. The table below shows the reaction of precious metals in the past couple of years to the news of the jobs market.




The correlations are negative so that gold and silver tend to follow the news from the labor market. Moreover, the correlations among the month to month change in the number of added jobs and precious metals prices also have a mid-strong negative correlation. At face value, if the number of added jobs rises on a month over month basis and the numbers exceed the expectations; this tends to correspond to the decline of gold and silver on the day of this release.


This week, the JOLTS report will also be published and will provide anther key indicator to the changes in the labor market. This report tends to get less traction than the NF payroll, but it’s still an important report worth noticing that the FOMC follows. The current expectations are for the JOLTS to rise and reach 4.81 million open jobs – back in the previous month this number was at 4.74 million.


Another positive gain in the labor market could bring further down gold and silver.


Besides this report, in the U.S. the PPI consumer sentiment and retail sales reports will be released. They could provide additional information regarding the progress of the U.S. economy.


In Europe, the targeted LTRO will take center stage. This is the second tranche of the ECB to lend cash to banks so they could lend it to boost the economy. In last week’s ECB rate decision, Draghi kept things close to the vest while clinging on to his “wait and see” approach. But his tone was still dovish enough to bring down the Euro/USD. He also hinted a potential quantitative easing program that could start by 2015. This event could move markets most notably the Euro/USD, which is correlated to gold and silver. If the Euro keeps falling against the U.S. dollar, this may bring down bullion prices.


In China, the trade balance, CPI and new loans monthly updates will be released. China’s economic progress is another factor in determining the changes in the physical demand for precious metals.


The Euro fell against the U.S dollar by 1.6% (on a weekly scale); the Australian dollar also depreciated against the U.S dollar by 2.9%; the yen depreciated against the U.S dollar by 3.4%. The correlations between these currencies pairs and precious rates remained moderately mid-strong: during the month the correlation between USD/Yen and gold reached -0.34; the correlations between Euro /USD and gold reached 0.42. These correlations suggest the recent developments in the forex markets may have had a modest effect on the shifts in gold and silver.


Gold holdings in the GLD ETF changed direction and rose to 720.914 tons by the end of previous week – a 0.46% gain; it’s still 6.6% lower than its levels recorded at end of September.


Takeaway

The high volatility in the bullion market may ease down, but the recent seesaw motion could continue to build up until the upcoming FOMC meeting. Until then, if the U.S. economy keeps showing signs of recovery including in the labor market, this is likely to bring down gold and silver. Finally, the changes in the Euro could also play a secondary role in curbing a possible recovery of precious metals.

[Samirofi]

Gold and Silver Forecast for December 22-26

The bullion market cooled down again last week even though the recent FOMC statement was relatively balanced and the market’s reaction was relatively calm. This upcoming short week is likely to entail low volatility as the year is winding down. The main reports for the week include: U.S. GDP for Q3 (final estimate), core PCE, new home sales, core durable goods and existing home sales. Here is an economic preview for December 22^nd to 26^th and a rundown of last week’s main events.


Last week’s FOMC meeting concluded with, as expected, a change in the wording of the statement: The FOMC omitted the term “considerable time” with reference to the timing of the first rate hike. But the FOMC also hedged this omission by switching the term with another one – patience. And they also stated that it should be considered a clear continuous of the current policy, i.e. the decision to raise rates is only data driven and could take time until the next one will occur. So this “musical chairs” game with wording resulted in the statement being a bit convoluted. All in all, it didn’t lead to big reaction from gold and silver that remained relatively stable during the release of this statement, as you can see in the table below.




It seems that the FOMC statement was accepted as relatively balanced and as such didn’t have a strong adverse impact on gold and silver. Also, precious metals already dropped in the days leading to the statement.


Despite the modest reaction in gold and silver to this news, the U.S. dollar did have a strong reaction to this news as it sharply rose against the Euro and Japanese yen. The recovery of the U.S. dollar may have, on a weekly scale, brought down gold and silver. This trend could continue, in which U.S. dollar rallies against leading currencies. Last week, U.S. dollar appreciated against the Euro, yen and Aussie dollar by 1.8%, 0.7% and 1.4%, respectively.


This week, the U.S. GDP, core durable goods, and core PCE will be released and they may have a short term impact on the prices of gold and silver. For the GDP, the current market estimates are for a modest bump in the current growth rate figure of 3.9%. This news may have a modest impact on the direction of precious metals. The PCE and core PCE are expected to come up. But as long as the core PCE remains well below 2%, it’s likely to keep the FOMC on the fence as to whether to raise rates in 2015.


Since this week is expected to be short, the volatility in the precious metals markets is likely to slowly subside. Even though, during the holiday season there could sudden surprises and a spike in volatility as was the case in the recent Thanksgiving holiday with oil prices.


By the end of last week, gold holdings in the GLD ETF declined to 724.552 tons– a 0.16% slip; it’s also 6.2% lower than its levels recorded at end of September.


Takeaway

The bullion markets is expected to future weak, especially if the U.S. dollar keeps coming down and the U.S. data figures are better than expected. The FOMC didn’t make it clear when the next rate hike will occur but for now this ambiguity is keeping gold and silver from plummeting down. The expected low volatility in the coming couple of weeks is likely to keep precious metals close to their current levels.