Gold And Silver Outlook For September 10, 2012

 |  Includes: GLD
by: Lior Cohen

The prices gold and silver traded up again during last week, and I suspect precious metals rates will increase further this week. The number of jobs added in August according to the U.S. non-farm payroll report didn't meet expectations. This news may have been among the factors to pull up precious metals and depreciate the USD. As I have pointed out in the precious metals weekly outlook, the main event of the week will revolve around the FOMC meeting. But there are several other events and reports that could affect the bullion market including: EU Council meeting, German Court Ruling on bailout, U.S. retail sales report and U.S CPI. On today's agenda: Japan Current Account, China's Trade Balance, and China New Loans.

On Friday, Gold rose by 2.1% to $1,740.5; Silver also saw a 3.1% hike to $33.69. During last week, gold increased by 3.1%; silver, by 7.2%. Furthermore, on Friday the SPDR Gold Shares (NYSEARCA:GLD) also hiked up 2.15%, and reached 168.44 by September 9th.

As seen below, the chart shows the changes of normalized prices of precious metals in the last several weeks (normalized to 100 as of August 23rd). During recent weeks, gold and silver have experienced an upward trend.

(click to enlarge)Click to enlarge

On Today's Agenda

Japan's Current Account: this report may affect the direction of the Yen;

China New Loans: According to last month's report, the total loans decreased despite the efforts of the People's Bank of China to stimulate the economy - by slashing the interest rate and easing the restrictions on commercial banks regarding new loans.

China's Trade Balance Report: according to the last month's update, China's trade balance decreased to a $25.1 billion surplus; if the surplus will further contract, it may indicate that China's economy is slowing down and this, in turn, may adversely affect rates of commodities;

Currencies / Bullion - September Update

The Euro/ USD also saw a 1.5% hike on Friday to 1.2817. During last week, the Euro/USD rose by 1.9%. Further, other currencies including the Aussie dollar also appreciated on Friday against the USD by 0.96%. The linear correlation between gold and Euro is still robust: during August/September, the correlation between the gold and EURO/USD was 0.615 (daily percent changes). Due to the many news items on this week's agenda (ECB bond program in the German Court, FOCM meeting) the Euro/USD is likely to be very volatile.

Daily Outlook

The prices of precious metals increased last week, especially following the U.S. labor report. The report continued to show little progress in the U.S. economy and this news, along with the renewed expectations of another QE program -- following the publication of the minutes of the previous FOMC meeting -- rallied the prices of bullion. I still guess the FOMC won't announce another QE program just yet, even though the market already expects that. In Europe there are expectations that the German Court will approve the bailout. If the ECB aid will be requested by Spain, even though there are reports that Spain might delay the request until next month, this could also contribute to the rally of the Euro. Today's publication of the China's trade balance and new loans might have a modest effect on the USD and commodities. If these reports show little progress, it could adversely affect bullion prices.

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.