Last week gold and silver started off the week the same way they have shifted during the last couple of weeks with little movement until Friday when both metals (mainly gold) spiked. The disappointing U.S employment figures were the obvious catalyst for this sharp gain for both metals on Friday. This news may have rekindled the speculation regarding the possibility of the Fed introducing another quantitative easing program.
If there will be another QE program it could reheat the current stagnant bullion market and drive prices up again. I'm not sure the current economic situation warrants another QE program. The upcoming FOMC meeting at the end of June might affect the markets if the tone of the FOMC will change from the previous meetings.
During last week, gold edged down during the first few days of the week but spiked on Friday. During last week it rose by 3.24%; silver increased on a weekly scale by 0.44%. Furthermore, during last week the SPDR Gold Shares (GLD) also rose by 3.16% and reached by June 1st 157.5, which is still a low rate for 2012.
The video link presents a gold and silver outlook for the main publications the main publications and events that may affect bullion between June 4th and June 8th. Some of these reports and events include:
Tuesday - U.S. ISM Non-Manufacturing PMI: During April this index declined to 53.5% - this means the non-manufacturing is expanding but at a slower pace than before;
Wednesday - ECB Rate Decision: In the previous interest rate decision the President of ECB, Mario Draghi left the rate unchanged at 1%; If the ECB changes the rate, it may affect the euro;
Thursday - U.S. Jobless Claims Weekly Report: In the latest update the jobless claims rose by 10k to 383,000; this upcoming weekly report may affect commodities;
Thursday - Bernanke's Testimony: This will likely be the main event of the week. Following the recent U.S employment report many think this will trigger the Fed to lean towards another stimulus plan. The Chairman of the Federal Reserve will testify before the Joint Economic Committee in the U.S Senate. If the Chairman of the Fed will consider the recent U.S economic developments as a turn for the worst it could signal that the Fed might consider another monetary intervention;
Friday-American Trade Balance: According to the recent American trade balance report regarding March 2012 the goods and services deficit increased during the month to $51.8 billion.
In conclusion, I speculate precious metals might continue to rally during the week if the speculation around another Fed intervention will continue. The upcoming U.S reports, including the trade balance report and non- manufacturing PMI, affect bullion. If the U.S reports continue to be negative or don't meet expectations it could further push up precious metals. If Bernanke will hint of a shift in the economic projections of the Fed or better yet, hint of a possible intervention in the markets by the Fed, it could positively affect bullion rates.
I still think, eventually, the Fed won't budge from its current policy and thus the bullion market will become stagnant again. On the other hand, the developments in Europe could further drag down the euro, which could consequently also adversely affect bullion.
