Gold And Silver Outlook For September 3, 2012

 |  Includes: GLD, SLV
by: Lior Cohen

The prices of gold and silver rose again last week, and I suspect bullion rates will continue to rally during this week. The recent speech of Bernanke at Jackson Hole raised the expectations that another QE program is right around the corner. I still think Bernanke's speech didn't offer any insight as to the future steps of the FOMC. His main points in the speech weren't much different than any of his recent speeches or testimonies. As I pointed out in the precious metals weekly outlook, the main events of the week will revolve around the U.S manufacturing PMI, Mario Draghi's speech and U.S non-farm payroll report. Today is a Holiday (Labor Day) in the U.S so the markets there will be closed. On today's agenda: Australian Retail Sales, GB Manufacturing PMI, EU Flash Manufacturing PMI and ECB President Draghi Speaks.

On Friday, Gold increased by 1.84% to $1,687.6; Silver also rose by 3.27% to $31.44. During August, gold rose by 4.52%; silver, by 12.64%. Furthermore, on Friday the SPDR Gold Shares (NYSEARCA:GLD) also hiked by 2.31% and reached 164.22 by August 31st.

As seen below, the chart shows the development of normalized prices of precious metals in the last several weeks (normalized to 100 as of July 19th). During recent weeks gold and silver had an upward trend.

Click to enlarge

On Today's Agenda

Australian Retail Sales: The retail sales (seasonally adjusted) increased by 1% in June; this news may affect the Aussie dollar;

GB Manufacturing PMI: In the previous report (July) the index declined to 45.4%. This rate means the manufacturing sector is contracting at a faster pace; this index may affect the British Pound;

ECB President Speaks: Mario Draghi will give a speech at Brussels; there are expectations that the ECB will announce its bond purchase program in the near future, but the tension between the President of the German Central Bank and ECB President over this program could impede its progress. If the ECB President will refer to this issue, it could affect the Euro, which is strongly linked to bullion rates;

Currencies / Bullion Market - September Update

The Euro/ USD rose on Friday by 0.58% to 1.2579. During August (UTD) the Euro/USD rose by 2.24%. Further, other currencies including Aussie dollar also appreciated on Friday against the USD by 0.31%. The linear correlation between gold and Euro is still robust: during August, the correlation between the gold and EURO/USD was 0.508 (daily percent changes). Therefore, if the Euro will continue to trade up against the USD, it could also pull up the prices of precious metals.

Daily Outlook

The prices of precious metals rose in the past couple of weeks. The renewed expectations that the Fed will announce another quantitative easing plan in the near future - Bernanke's speech and last week's publication of the minutes of the FOMC meeting contributed to the rise of these expectations - reignited the bullion market. On Friday, the non-farm payroll report could offer some information of the progress of the labor market. If the labor market will continue to show signs of growth it could rally commodities prices. Today's publication of the Australian Retail Sales, GB Manufacturing PMI and EU Manufacturing PMI might have a modest effect on the Aussie dollar, British Pound and Euro, respectively. In such a case, these currencies could also affect bullion rates. Finally, if the Euro and other "risk currencies" will trade up during the week they could contribute to the rise of precious metals rates.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.