Gold and silver tumbled down in recent weeks. Their decline didn’t seem to coincide with the developments in the forex markets including the sharp depreciation of the Japanese yen. In the U.S jobless claims rose by 28k to 385k; non-farm employment increased by only 88k during March – much lower than many had expected. This news may have contributed to the rally of precious metals by the end of the week. Last week in Europe, the ECB left the rate flat at 0.75% but in the press conference Mario Draghi hinted he might cut the rate in the near future. Will gold and silver continue to tumble down next week? Here is a short outlook for April 8th to April 12th; this includes a fundamental analysis of the main reports, events and decisions that will unfold during the week and may affect precious metals including: minutes of FOMC meeting, U.S federal budget, U.S retail sales, Bernanke’s speech, EU Economic Summit, China’s new loans, U.S consumer sentiment, U.S industrial production, OPEC monthly report, Japan’s current account, China’s new loans, and U.S. jobless claims.
Gold declined during last week by 1.21%; moreover, during the week, the average rate reached $1,571.3 /t. oz which was 1.88% below last week’s average rate. Gold ended the week at $1,575.5 /t. oz.
Silver price plummeted during the previous week by 3.79%; furthermore, the average rate fell by 4.9% to reach $27.20/t oz compared to last week’s average.
Based on the upcoming publication and the shift in market sentiment the price of gold and silver might continue to slowly decline in the coming days. The last couple of U.S reports weren’t positive, but if the coming U.S reports including: retail sales, jobless claims, consumer sentiment and industrial production will show signs of recovery and growth, they could pull back down the prices of gold and silver. Next week the EU Summit might shed some light on the future developments in Europe vis-à-vis Cyprus’s bailout. This summit could affect the Euro. Bernanke’s upcoming two speeches aren’t likely to stir up the precious metals markets. The main event related to precious metals will be the publication of the minutes of the FOMC meeting. If, the minutes will offer some insight behind the future plans of the Fed, it could affect the direction of precious metals. The SPDR gold trust ETF holdings continue to fall: the ETF gold hoards fell by 3% last month. If the hoards will continue to dwindle, they could indicate the demand for gold is falling. The long term securities yields tumbled down in the past few days. This suggests the market sentiment is becoming more bearish. This shift in market sentiment might eventually help rally precious metals, assuming this shift will persist. In India, if the Rupee will continue to depreciate against the USD, as it did during last week; it may negatively affect the demand for gold in India. Finally, if the Euro, Japanese yen, Aussie dollar, Canadian dollar and other currencies will depreciate against the USD, they could also negatively affect precious metals.