The prices of gold and silver fell during last week. As the year is winding down and the concerns revolving the fiscal cliff might result in a rise in the volatility of precious metals. Furthermore, in the past couple of years the prices of gold and silver tended to shift with an unclear trend during the last week of the year. Will this unclear trend reappear? Last week, several U.S reports were published. These reports include: U.S GDP for Q3 2012 was revised up to a growth rate of 3%; the Philly Fed index bounced back in the December Survey; the U.S jobless claims rose by 17k to reach 361k. These news items may have affected precious metals during the week as most of the reports showed progress in the U.S economy. Here is a short forecast for December 24th to 28th; this includes a fundamental analysis of the main publications that may affect bullion such as: U.S consumer confidence report, U.S new and pending home sales, Bank of Japan minutes of monetary meeting, Italian bond auction, and U.S. jobless claims.
The price of gold fell during last week by 2.11%; moreover, during said week, the average rate reached $1,667.62 /t. oz which is 2.24% lower than the previous week’s average. Gold ended the week at $1,659.4 /t. oz.
Silver also tumbled down during last week by 6.66%; moreover, the average rate also declined by 6.05% to reach $30.93/t oz compared to the previous week’s average.
The Euro edged up against the U.S dollar by 0.19% (on a weekly scale); conversely, other “risk” currencies such as the Australian dollar depreciated against the U.S dollar by 1.61%. The correlation between the Euro/USD and precious metals has further weakened during recent weeks is low and weak: during recent weeks the correlation between Euro/USD and gold reached only 0.08 and between AUD/USD and gold the correlation was also 0.15. Nevertheless, if the Euro and other “risk” will rally during the week, this may contribute to the increase of gold and silver.
In the video below there is a broad overview of the main publications that may affect gold and silver prices between December 24th and December 28th. These include the above-mentioned news items such as: U.S consumer confidence report, U.S new and pending home sales, Bank of Japan minutes of monetary meeting, Italian bond auction, and U.S. jobless claims (just to name a few).
In conclusion, I guess gold and silver will move with an unclear trend during the last week of the year and may eventually slightly fall on a weekly scale. The ongoing debate between the White House and Congress could keep the market volatility high as they will try to avoid the fiscal cliff. The low trading volume could also be another factor that will result in an increase in price volatility. The FOMC decision to expand QE3 didn’t affect for now precious metals prices, but this could change in the weeks to follow. The upcoming reports regarding the U.S economy including: new and pending home sales, consumer confidence report and jobless claims, could affect the USD and commodities prices: if these reports will show progress in the U.S economy, they could pull back the prices of gold and silver. If the Indian Rupee will continue to depreciate against the USD, as it did during last week, it may pull back the demand for gold in India, among the leading consumers of gold. Finally, if the Euro, Aussie dollar, Canadian dollar and other risk currencies will appreciate against the USD, they could help rally precious metals.
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