Gold and Silver Outlook for August 12-16

During last week, gold and silver bounced back. The depreciation of the US dollar against leading currencies may have contributed to the rally of gold and silver. The decision of RBA to cut its rate by 0.25 pp may have pulled up the Aussie dollar as this decision was anticipated.  In the U.S, jobless claims rose by 5k to reach 333k. Will gold and silver change direction this week?  

 

Herein is a short overview that shows the main publications, events and decisions that will come to fruition next week between August 12th and August 16th and may affect precious metals.  

 

Despite the recent rally of precious metals prices, their movement remains erratic and their direction remains unclear. For next week, let’s break down the upcoming reports and events by regions:

U.S

The main reports that will be published this week are: Philly Fed index, housing starts and building permits, CPI, PPI, retail sales and jobless claims. In the recent FOMC meeting, the FOMC didn’t offer any additional information regarding whether a tapering in September is imminent. The developments in the U.S economy could influence FOMC members that it’s time to slowdown the asset purchase program. Moreover, the upcoming reports could affect the direction of gold and silver prices via the speculations around whether the future steps of the FOMC. If these reports will beat expectations and will keep showing progress it could raise the odds of tapering QE3, which may adversely affect gold and silver. I still think the slow progress in the employment, the potential future budget cuts the government may implement and the low inflation will keep the asset purchase program in 2013.     

China and India

The two leaders in importing gold and silver – India and China – will continue to play a role in the progress of gold and silver prices. If the demand for gold and silver in China and India will continue to rise, this could maintain the current levels of precious metals.

 

Finally, gold holdings of SPDR gold trust ETF continue to tumble: During August, the ETF’s gold holdings fell by 1.75% and by 32.55% during 2013 (up-to-date). Current gold holdings are at 911.13 tons. If the ETF’s gold holdings will keep declining, this could indicate the demand for gold as an investment will diminish.

I remain neutral of gold and silver. My guess is that gold and silver might slightly slide this week but their overall trend will remain unclear.

For further reading:

Gold and Silver Outlook for August

Weekly Outlook of Financial Markets for August 12-16

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