The prices of precious metals continued their downward trend throughout most of last week. The concerns regarding the fiscal cliff is among the reasons the FOMC decided to expand QE3 by purchasing long term treasuries securities at a pace of $45 billion per month starting January. Except for this announcement, other news items didn’t seem to have a substantial effect on bullion. Last week, several U.S reports were published. These reports include: U.S PPI fell by 0.8% mainly due to the decline in energy rates; the U.S jobless claims declined again by 29k to reach 343k; finally, the CPI also fell by 0.3%. These news items may have adversely affected precious metals during the week, although precious metals remained virtually unchanged during most of the week. Will gold and silver continue to fall?
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 December 17th to 21st. Some of these reports include:
Wednesday – U.S. Housing Starts and building permits: housing starts was historically correlated with gold price – as housing starts rise, gold tended to decline the next day; in the previous monthly report, annual rate of housing starts reached 894,000 in October, which was 3.6% above September’s; building permits declined during October by 2.7% (M-o-M);
Thursday – Final U.S GDP 3Q 2012 Estimate: In the second estimate, the U.S GDP during the third quarter expanded by 2.7%, which was close to the figure anticipated; in the second quarter, the GDP growth rate was only 1.3% (annual rate). If there will be a sharp change in the growth rate from second to third estimate, this could affect precious metals via the movement of the USD;
Thursday – Philly Fed Manufacturing Index: In the recent November survey, the growth rate declined from +5.3 in October to -10.7 in November. If the index will continue to decline it may adversely affect the U.S Dollar;
Friday – U.S Core Durable Goods: As of October, new orders of manufactured durable goods rose to $216.9 billion; if this report will show a gain in new orders then it could pull up the US dollar;
In conclusion, I guess gold and silver will continue their downward during the rest of the week. Moreover, the volatility might further shrink during the week as the year winds down. The recent FOMC decision to expand QE3 had a very short positive effect on precious metals prices. Moreover, this decision didn’t curb the downward trend of precious metals during most of the week. This could mean that for the rest of the month gold and silver will continue to slowly dwindle. The upcoming reports regarding the U.S economy including: housing starts, core durable goods, last estimate of GDP and jobless claims, could affect the USD and commodities prices: if these reports will show an ongoing growth in the U.S economy, they could help rally commodities prices. The upcoming publication of Canada’s GDP and durable goods report could affect major commodities via its local currency. Finally, if the Euro, Aussie dollar, Canadian dollar and other risk currencies will continue to appreciate against the USD, they could curb the downward trend of precious metals.
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