The prices of gold and silver continued their downward trend last week. Their recent fall coincided with the strengthening of the US dollar against the Euro. In the U.S, the Non- farm payroll report was released and was better than anticipated: 204k jobs were added in October, which was even more impressive considering the government shutdown, which, according to some estimates, resulted in 130k jobs lost. This news reignited the speculations around the Fed’s next move and the progress of the U.S economy. Further, the US GDP grew by 2.8% during the third quarter, which was also better than expected. The other big headline from last week was the ECB’s decision to reduce its cash rate to its lowest level of 0.25%; this news pulled down precious metals prices and rallied the US dollar against the Euro. Will gold and silver prices continue to fall this week? Here is a short outlook for November 11th to November 15th including: U.S industrial production, German GDP for the third quarter, China’s new loans, U.S federal budget balance, Yellen testifies, ECOFIN summit, and U.S. jobless claims.
Last week’s U.S GDP and NF payroll report were better than expected, which contributed to the rally of the US dollar and may dragged down gold and silver prices. The U.S progress may have rekindled the speculations around the Fed tapering QE3 in December.
The upcoming U.S data including industrial production, trade balance, and jobless claims could offer some additional information regarding the developments of the U.S economy.
If these reports meet the current expectations, they could continue to pull up the USD and thus drag down gold and silver.
In conclusion, the progress of the U.S economy as indicated in the recent economic reports including NF payroll, jobless claims and GDP for third quarter is likely to keep the strong US dollar. Moreover, the latest downgrade of France’s credit rating could also weaken the Euro/USD, which tends to be correlated with precious metals prices. If U.S economy continue to progress, it could keep this recent upward trend of USD, which is likely to weaken bullion and pressure down their prices. Nonetheless, several factors could play in favor of gold and silver including the strong demand for precious metals in Asia and the recent rise in demand for GLD’s ETF, which might indicate a recovery in demand for gold as an investment.
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