Gold and silver did not show much movement and remained almost stable on Wednesday.
Gold edged up by 0.3% last week and reached an average of $1772.34 which is higher than the last week average of $1749.04. Silver too increased by 1.8% and reached an average of $34.6 compared to last week’s $33.99
Apart from the regular reports like US jobless claims, Euro zone crisis, launch of QE3, Chinese growth data etc, other factors that were responsible for movements in the markets were the US home sales and core durable goods report, the ETP’s report, the Italian bond auction and most importantly the relation between dollar and various currencies.
The Euro and the Australian dollar declined against the US dollar. This could be one of the reasons that could have restrained the recovery of precious metals. The relation between the US dollar and other currencies plays an important role in the movement of gold and silver prices. A further decline of the Euro against the US dollar could pull down the prices of precious metals.
The German Bond Auction (to be held on Thursday) may relieve the market of its bullish sentiments if it is held out successfully.
Reports claim that the ETPs continue to raise their bets on silver as the amount held in ETPs has reached 18,525.76 metric tons which is only 0.6% shy from its record high from last year. This suggests that many bullion traders still have faith in precious metals.
Moreover the comment by the President of Federal Bank of Philadelphia (on the recent decision of the launch of QE3) that it may not help recover the US economy has once again created some doubts in the minds of market players and has thus created a negative impact on precious metals
While the fresh EU turmoil is pressuring the raw commodity sector this week, and the precious metals have chosen to follow, it’s seems that if there is a serious deterioration in the ongoing EU debt crisis, then gold prices would see fresh, strong safe-haven demand surface.
Summing it up, gold and silver will continue to remain more or less stable unless there is some big proclamation regarding the above mentioned reports. The launch of QE3 did have positive effect on precious metals but some constructive data from the other sources together will help boost the prices further. The markets will mainly await the ECB President speech, the US core durable goods report, the home sales report, Final GDP estimate and the jobless claims report.
Plenty in basket – We just need to wait and watch.
