Precious metals resumed their upward trend during most of last week despite the depreciation of major “risk related currencies” against the USD. Bernanke’s speech from last week didn’t seem to influence traders. I guess we will have to wait for the next FOMC meeting at the end of the month and see if the Fed will adjust its policy. Several reports were published last week and may have also affected precious metals: China’s GDP expanded by 7.9% in the forth quarter; U.S retail sales rose by 0.5% in December; Philly Fed index declined in the January survey; the U.S jobless claims decreased by 37k to reach 335k; housing starts sharply increased in December; both the core PPI and CPI inched up in December. The report on China may have helped rally precious metals; the U.S related reports showed a mixed signal as to the progress of the U.S economy, but were mostly positive and may have also contributed to the rally of commodities. Will gold and silver continue to trade up 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 21st and January 25th. Some of these reports include:
Tuesday – U.S. Existing Home Sales: in the previous report regarding November 2012 the number of homes sold rose to a seasonally adjusted annual rate of 5.04 million houses sold; if this trend will continue it may pull up the U.S dollar.
Wednesday – Bank of Canada’s Overnight Rate: The Bank of Canada will publish its decision on the Canadian overnight interest rate, which remained flat at 1% as of the recent decision. The BOC may continue its policy and keep the interest rate at 1%; on the other hand, the recent slowdown in Canada’s economy might prompt BOC to cut the rate;
Friday – U.S. New Home Sales: in the previous report (for November), the sales of new homes rose to an annual rate of 377,000 – a 4.4% gain (month over month); if the number of home sales will rally, it may indicate a sign of some recovery in the U.S real estate market which may also affect the USD.
In conclusion, I guess gold and silver will continue to slowly rise during the week. The ongoing rise in trading volume is likely to slower the price volatility of gold and silver. The main event of the month will be held at the end of the month – the first FOMC meeting. This meeting might show if the FOMC is planning to slowdown its monetary expansion. Last week’s speech by Bernanke didn’t offer any insight regarding the future steps of the Fed. The recent rally of precious metals coincided with the rally of other commodities such as oil and stocks markets. Perhaps this rally is just part of the whole January effect. Moreover, the QE3 program is starting to have some positive effect on the prices of gold and silver. I still, however, that the prices of gold and silver won’t reach new highs only maintain their range from the past several months. The uncertainty around future steps U.S policymakers will take vis-à-vis spending cuts and debt ceiling could keep contributing to the rally precious metals in the coming weeks.
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