Gold and silver edged up on the last day of the week; on a weekly scale both precious metals also increased. As I have pointed out in the gold and silver weekly outlook the main events of the week will revolve around the upcoming FOMC meeting and the publication of the non-farm payroll report. The U.S GDP grew by only 1.5% during Q2; this news didn't seem to affect commodities on Friday.
The rally of the euro helped bullion rates to rise during last week. If the euro will change direction and fall during the upcoming week this could also adversely affect precious metals prices. Currently gold and silver are rising. On today's agenda: Spain's GDP 2Q 2012 Estimate, Italian long term Bond Auction.
Gold edged up on Friday by 0.18% to $1,622.7; silver also rose by 0.19% to $27.5. During July, gold rose by 1.15% while silver slipped by 0.41%. Furthermore, on Friday the SPDR Gold Shares (GLD) also edged up by 0.49% and reached by July 27th 157.54.
In the chart bellow are the normalized rates of these precious metals during the past several weeks (normalized to 100 as of July 13th). As you can see, during the last several weeks gold and silver didn't move much.
On Today's Agenda
Spain's GDP 2Q 2012: In Q1 Spain's GDP contracted by 0.3%; in the 4Q2011 the GDP also contracted by the same rate. If there will be a sharp change in the growth rate in the upcoming report this could affect the euro and bullion prices. This could also affect ECB's monetary policy;
Italy's 10 Year Bond Auction: In the previous bond auction, which was held at the mid of July, the average yield reached 5.82%;
The euro/USD rose again on Friday by 0.33% to 1.2323. Further, other currencies including AUD and CAD also appreciated on Friday against the USD by 0.83% and 0.67%, respectively. The correlations between gold and the above-mentioned rates remain robust: during July the correlation between the gold and EURO/USD reached 0.72 (daily percent changes); the relation between silver and EURO/USD was 0.66. Therefore, if the Euro will change direction and fall, it may also pull down precious metals rates.
Gold and silver might continue the upward trend from last week. Further, I also guess bullion will only edge up as they did during recent weeks. The volatility might start to pick up after the FOMC meeting, the ECB and MPC monetary decisions and the U.S non-farm payroll report. If the FOMC won't announce or hint of QE3 and I think it won't, then bullion rates might change direction and tumble down throughout the last couple of days of the week. Finally, if the USD will continue to appreciate, it could also adversely affect commodities rates.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.