Last week, gold and silver bounced back in the second week of July after declining during the first week of the month. The minutes of the FOMC meeting were released, but they didn't hint on the possibility of another stimulus plan and thus the report didn't affect bullion rates much.
On Friday, the Chinese GDP growth rate for Q2 was published and was lower than many had anticipated, touching just 7.6%. This news may have contributed to the rally of commodities on Friday last, as it raised speculations of the possibility of the BOC stimulating the Chinese economy.
The main events of the week will revolve around Bernanke's testimonies, U.S housing starts, the minutes of MPC meeting, U.S core CPI ,Philly Fed survey and jobless claims.
Gold rose during last week by 0.83%. Silver, even more than gold, rose on a weekly scale by 1.67%. Furthermore, the average rate reached $27.18/t oz, which was 2% below the previous week's average $27.73/t oz. During the last week, the SPDR Gold Trust ETF (GLD) also rose by 0.28%, hitting 154.14 by July 13th.
This video report shows an outlook of gold and silver for the main publications and events that may affect precious metals between July 16th and July 20th. Some of these reports and events include:
Tuesday - Bernanke's Testimony: Following the recent publication of the minutes of the FOMC meeting, if Bernanke hints of another stimulus plan, it could lead to a rally in the commodities markets. The title of the speech is "Semiannual Monetary Policy Report to the Congress".
Wednesday - U.S. Housing Starts: This report has been historically correlated with gold price - as housing starts decrease, gold tends to rise the following day. For the previous report, the adjusted annual rate reached 708,000 in May 2012, which was 4.8% below April's rate.
Thursday - Philly Fed Manufacturing Index: This monthly survey shows an estimate for the developments of the US economy; the survey measures the manufacturing conditions. In the previous June survey, the growth rate fell from -5.8 in May to -16.6 in June 2012. If this trend continues, this index may adversely affect not only the USD, but also commodities (the recent Philly Fed review).
In conclusion, I guess the recent rally in bullion rates during the last week was mostly driven by speculation on the future steps of the U.S and China and both country's respective possibility of a stimulus plan; if headlines crop up confirming this speculation, bullion rates may continue to rally. Bernanke's testimony too might affect the markets if he hints on the possibility of QE3 in the near future. However, my guess is that this will not be the case.
Further, I speculate precious metals will change direction and trade down during the upcoming week. The upcoming reports from Canada and the U.S - such as CPI, retails sales, Philly Fed survey and housing starts - might affect the commodities and forex markets. If these reports continue to show little growth in their respective economies, they could adversely affect commodities rates, including bullion.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
