The prices of precious metals shifted gear again and this time declined last week. The recent news of the hike in the imposed tax on gold imports in India may have contributed to the expectations the demand for gold in this country will fall. In the U.S several reports came out and showed the U.S economy is progressing: the manufacturing PMI in January increased; number of jobless claims declined last week. These news items may have also pulled down precious metals. The decision of the BOC to leave the rate unchanged and lower the expected GDP growth rate in 2013 may have pulled down not only the Canadian dollar but also precious metals. Will gold and silver change direction and bounce back next week?
In the video report herein provides an outlook of gold and silver that include the main publications and events that may affect precious metals during January 28th and February 1st. Some of these reports include:
Wednesday – FOMC Meeting: in December’s FOMC meeting, the FOMC expanded its QE3 program so that the Fed is currently purchasing $40 billion worth of mortgage backed sectaries and $45 billion worth of long term secretaries. The current expectations are that the Fed will maintain its current policy. The currently low inflation rate and slow recovery in the jobs market is likely to keep this expanding monetary policy in the near future. If the Fed will refer to its future exit plan, it could pull down precious metals;
In conclusion, I guess gold and silver will resume its downward trend during the week. The upcoming FOMC meeting is likely to result in any earth shattering resolutions. Moreover, The Fed might only further talk about its future exit strategy from the current $85 billion a month purchase program. In such a case, this news might bring down the prices of gold and silver. The Fed’s budget has recently passed the $3 trillion threshold. So the concerns many investors might have regarding the current monetary policy are likely to keep gold and silver from tumbling down. In the coming weeks, the debt ceiling debates among U.S policymakers are likely to take another step forward; thus, unless policymakers won’t reach an agreement, this situation could help rally precious metals in the coming weeks. The upcoming reports regarding the U.S economy including: non-farm payroll report, core durable goods, manufacturing PMI and jobless claims, could affect the USD and precious metals rates: if these reports will show growth in the U.S economy, they may adversely affect the rates of gold and silver. Alternatively, the upcoming report regarding China’s manufacturing PMI could give an upward push to commodities if the PMI will increase. Finally, if the Euro, Aussie dollar, Canadian dollar and other risk currencies will depreciate against the USD, they could also adversely affect precious metals.
For further reading: