Gold and Silver Outlook for September 3rd

Gold and silver rallied during most of July and August. But now that summer is over, will this recent recovery of precious metals hold up, or was it partly driven by light volumes of trade? In China, the final HSBC’s manufacturing PMI report came out for August and showed the PMI index rose to 50.1, which means the manufacturing sectors in China are progressing. This news may slightly positively affect commodities prices. Looking forward for this week, will gold and silver change direction and fall? On today's agenda: Reserve Bank of Australia rate decision, U.S. Manufacturing PMI, Spain's unemployment Change, GB Construction PMI, and Australian Retail Sales.

The gold and silver futures volumes of trade have fallen in recent days and reached on Friday 141 thousand and 47 thousand, respectively. For silver, the volume is at its lowest since the beginning of August.  If the volume will pick up this week, this could suggest the chances of sudden sharp move in the prices of gold and silver due to high volume will rise.

During last month, the U.S long term treasuries yields rose (10 year notes reached 2.78% yield by Friday); they have reached in August their highest level since late 2011. The relatively high yields may have coincided with the recent rally in gold and silver. These trends may suggest the market expects the Fed to taper QE3, which will reduce the pressure on long term yields and thus pull them back up.

On Today's Agenda

U.S. Manufacturing PMI: In July, the index sharply rose to 55.4%; this means the manufacturing is expanding; this index may affect foreign exchange rates, commodities markets;

Reserve Bank of Australia – Cash Rate Statement: In the previous rate decision of RBA, it had reduced its cash rate by 0.25 pp to reach 2.50% – its lowest level in years, which contributed to fall of the Aussie dollar. The current expectations are that RBA will keep the interest rate unchanged;  

Australian Retail Sales: This monthly report will refer to July 2013. In the previous update, the seasonally adjusted retail sales remained unchanged during June; this news may affect the Aussie dollar, which tends to be linked with commodities prices;

For further reading:

Gold and Silver Monthly Outlook for September

Gold and Silver Weekly Forecast for September 2-6

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