Gold and silver changed direction and fell during last week. Their tumble coincided with the fall of other commodities such as oil, natural gas and leading “risk related currencies” such as Euro and Aussie dollar against the USD. Last week, the Reserve Bank of Australia decided to reduce its cash rate by 0.25pp to 2.75%. This news may have contributed to the fall of the Aussie dollar, which dragged along with it precious metals prices. Bernanke gave a speech on Friday in which he warned about the potential peril the shadow banking system is facing. This news may have also helped pull down bullion. In the U.S, jobless claims slightly declined by 4k to reach 323k. Will gold and silver rally this upcoming week? Here is a short outlook for May 13th to May 17th; this includes a fundamental analysis of the main reports, publications and speeches that may affect bullion markets. These include: Bernanke’s speech, U.S CPI, Philly fed survey, EU GDP for Q1 2013, U.S housing starts, Canada’s manufacturing sales, Germany’s ZEW economic sentiment, U.S retail sales, Euro Group meetings, and U.S. jobless claims.
Gold fell during last week by 1.88%; moreover, during the week, the average weekly price reached $1,459.14 /t. oz which was 0.30% below last week’s average. Gold ended the week at $1,436 /t. oz.
Silver also declined during last week by 1.46%; moreover, the average weekly rate decreased by 0.19% to reach $23.83/t oz compared to last week’s average.
Herein is a short overview that outlines the main reports, speeches and events that may affect gold and silver next week between May 13th and May 17th.
Based on above and latest developments in the gold and silver markets, the prices of precious metals might slightly rally during the week. Nonetheless, I still think that precious metals will resume their downward trend in the coming weeks. Along the way precious metals might rally as a correction to their downward trend of the past several weeks. If the upcoming financial reports including: China’s trade balance, Germany’s economic sentiment, EU GDP, and Canada’s manufacturing sales will show signs of growth, they could pull up gold and silver. Further, if the U.S reports including housing starts, jobless claims, retail sales, and Philly Fed survey will show slowdown in the recovery of the U.S economy they could also pull up bullion rates.
The FOMC will publish the minutes of the recent FOMC meeting on May 22nd. Until then, Bernanke’s forthcoming speech might stir up the markets if he will offer any insight regarding the next move of the Fed.
The SPDR gold trust ETF holdings continue to lose clients: the ETF’s amount of gold held fell by 2.2% since the beginning of the month and by 22.15% since the beginning of the year. If the holdings will continue to fall, they could indicate the demand for gold as an investment continues to diminish, which may have partly received a boost from the CME’s decision on April 15th to raise the requirements for cash deposits on precious metals contracts. The sharp fall of the Euro and Aussie dollar during last week may have also partly contributed to the fall of commodities prices. If these currencies will change direction and appreciate against the USD, they might pressure up precious metals. Finally, the Indian Rupee sharply depreciated against the USD last week; if this trend will persist, as it did during last week; it may adversely affect the demand of gold in India.