The prices of gold and silver slightly increased on a weekly scale. Precious metals sharply rose on Thursday along with the Euro and other commodities prices following the ECB's decision to keep the Euro rate unchanged and Mario Draghi's cautious but optimistic outlook of the Euro Area in 2013. Will gold and silver change direction and decline? As I have pointed out in the recent precious metals weekly outlook, several reports and events may affect bullion prices this week. These items include: U.S retail sales report, China's GDP, U.S housing starts, Philly Fed survey, GB and US CPI and jobless claims weekly update. On today's agenda: BOC Business Outlook Survey and Bernanke's Speech.
On Friday, the price of gold declined by 1.04% to $1,660.6; Silver price also fell by 1.66% to $30.38. During last week, gold rose by 0.71%; silver, by 1.55%. Moreover, during last week, the SPDR Gold Shares (GLD) also rose by 0.39% and reached by January 11th, 161.06.
As seen below, the chart presents the changes in the normalized prices of precious metals between November and January (normalized to 100 as of November 1st). During recent weeks, the prices of silver and gold have had an unclear trend.
On Today's Agenda
BOC Business Outlook Survey: This report analyzes Canada's businesses and offers some perspective of Canada's economic outlook.
Bernanke's Speech: In anticipation for the next FOMC meeting to be held by the end of January, many will look towards Bernanke's speech that could offer some perceptive behind the Fed's future monetary steps. The Chairman of the Federal Reserve will talk at the University of Michigan, in Ann Arbor. He is likely to refer in his speech on the Fed's monetary policy.
Currencies / Bullion Market - January Update
The Euro/USD rose on Friday by 0.54% to 1.3343. During last week, the Euro/USD increased by 2.1%. Moreover, some currencies such as the Aussie dollar also appreciated during the previous week against the USD by 0.52%. The recent rally of "risk currencies" may have slightly influenced precious metals traders. The correlations among gold, Euro and the Aussie remained weaker than in previous months: during December and January, the linear correlation between gold and Euro/USD reached -0.07 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.27 (daily percent changes). These weak relations might suggest the recent developments in gold and silver didn't coincide or resulted from the changes in the foreign exchange markets. Nonetheless, if the Euro and other risk currencies will change direction and depreciate against the USD, they might adversely affect gold and silver.
Prices of precious metals moved in an unclear trend during last week despite their rise on a weekly scale. The upcoming speech of Bernanke could affect precious metals if he will hint of the future plans of the Fed. If Bernanke will refer to the exit strategy of the Fed with respect to its expanding monetary policy, this could pull down the prices of gold and silver. The uncertainty around the future moves of U.S policymakers with respect to the debt ceiling and the spending cuts might affect not only the USD but also bullion rates. These issues, however, are likely to affect commodities and forex markets in the weeks to follow. In the meantime, the upcoming U.S reports including: retail sales, CPI, PPI, housing starts, Philly Fed survey and jobless claims could affect not only the USD but also bullion rates. If these reports will show the U.S economy is expanding, they might adversely affect precious metals' prices. Finally, if the Euro and other "risk currencies" will decline during the week against the USD, they might also adversely affect precious metals.
For further reading see "Gold and Silver Outlook for January"
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.