The prices of precious metals edged down during the previous week. As the year is winding down, the clock is still ticking on the fiscal cliff. Up to now, the White House and Congress didn’t progress towards a viable plan to cut the deficit in this decade. Last week, several U.S related reports came out last week: U.S new home sales increased in November, U.S consumer confidence slipped in December; the U.S jobless claims declined by 12k to reach 350k. These news items may have adversely affected precious metals during the week. Moreover, the speculations that Paulson might cut his position in gold are contributing to the weakness of precious metals. Will gold and silver continue to fall? Here is a short forecast for December 31st to January 4th; this includes a fundamental analysis of the main report that may affect precious metals including: U.S manufacturing PMI, minutes of recent FOMC meeting, EU monetary development,Canada’s employment,Germany’s retail sales U.S non-farm payroll report,China’s manufacturing PMI, andU.S. jobless claims.
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 31st to January 4th. Some of these reports include:
Wednesday – U.S. Manufacturing PMI: During November 2012 the index declined to 49.5%, which means the manufacturing is contracting;
Thursday – Minutes of December’s FOMC Meeting: Following the December FOMC meeting, in which the Fed introduced its extension for QE3, precious metals rose on the day of the announcement only to resume their downward trend since then. The minutes of the recent FOMC meeting might add some additional insight behind this decision and the future steps of the FOMC;
Friday – U.S. Non-Farm Payroll Report: the number of non-farm payroll employment rose by 146k during November; if the upcoming report will continue to show growth of well above 120 thousand (in additional jobs) this could adversely affect precious metals as they tend to be negatively linked (see here a review of recent U.S employment report);
In conclusion, I guess gold and silver will continue to trade down during the first few days of 2013. As the year is winding down, the fiscal cliff debate is coming to its conclusion. The recent news is that Obama is still optimistic and determined in reaching an agreement with Congress. For now, it seems that the markets priced the scenario in which U.S officials won’t reach an agreement to avoid this fiscal cliff. Therefore, if the White House and Congress will be able to agree on the way of cutting the multi year budget deficit by Monday, this might lead to a sudden rally in commodities prices. The low trading volume is likely to continue until Thursday.. The FOMC decision to expand QE3 didn’t affect up to now precious metals. The upcoming minutes of the recent decision could shed some light on the future steps of the FOMC. The upcoming reports regarding the U.S economy including: non-farm payroll report, manufacturing PMI, non- manufacturing PMI and jobless claims, could affect the USD and precious metals prices: if these reports will show growth in the U.S economy, they could pull down gold and silver.
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