Gold prices have shot up last week on an increased likelihood of further money printing by the US Fed. Declines in silver and gold prices will relatively be well supported due to the Market’s fixation on a fresh round of monetary easing expected from the US, Europe and China.
Silver, Crude Oil and Gold Prices Expected To Swing Wildly In The Coming 20 Days
September would prove to be a critical month for gold markets. Silver and gold prices weakened exactly as alerted yesterday after the initial upside of euphoria. Given yesterday - gold trading along with silver and other base metals can now be expected to remain relatively subdued until Tuesday night and is expected to again pick up momentum from Wednesday onward.
Silver and gold prices along with crude oil and base metals may all see volatile see-saw swings on events scheduled for the next 20 days. The upside and downside swing triggers are mentioned below.
- Downside momentum from Monday til Tuesday night as there is no major Economic Data also expected to be released in these 2 days, except the German IFO Business Climate Index on Monday and the German CPI (Quarterly and Yearly Basis) on Tuesday. Sporadic movements in silver and gold trading may be seen on news and developments on the continuing European woes, which could mostly trigger downside movements in gold prices. Spanish Prime Minister Mariano Rajoy’s austerity drive will intensify this week as a sales-tax increase tightens the squeeze on consumers whose spending is already plummeting. Gold trading may see a small decline on negative news emerging from the eurozone. – Downside Trigger
- Important Quarterly US GDP numbers on Wednesday – may provide some upside as nothing earth shatteringly well is expected. – Upside Trigger
- More importantly the Initial Jobless Claims coming in on Thursday – may trigger some softening if numbers remain positive. – Downside Trigger
- Comex Silver Futures for September delivery entering contract closing week may also keep market movements extremely volatile, as short covering in large upside movements, may trigger further forced buying. – Upside Trigger
- Finally for the week, the ever crucial news on Fed Chairman Ben Bernanke’s conference from the Jackson Hole symposium on Friday 31 August. Gold prices may see sharp rises on hopes of having the announcement of the timing of the QE3. Possibility of QE3 will keep the US dollar under pressure. – Upside Trigger
- If the Fed does not give any hint or clarity on the timing of the further easing (QE3) this Friday, gold prices may sharply correct, but in the coming week. – Downside Trigger
- There can be fireworks in gold prices on Monday next week, as Bernanke’s speech this Friday comes on 31 August (which is a contract closing day for silver, copper and other base metals) with a long weekend holiday for the U.S. markets – Labor Day on Monday 3 September. – Downside Trigger
- Very high hopes from the ECB policy meet on September 6 to contain the eurozone crisis, will again trigger upside movements in gold. – Upside Trigger
- There are high expectations from China. Base metals have risen despite a softer Chinese economy, reflecting a view that weak data will trigger a more aggressive policy response. The PBOC – People’s Bank of China is expected to reduce bank reserve requirements and interest rates, with the government is likely to implement fiscal policies to boost economic growth. – Upside Trigger
- Uncertainty mixed with hopes about the U.S. monetary policy will continue until the September 7 jobs report. –Neutral View til announced.
- Hopes about the U.S.monetary policy could continue right up to the September 13 FOMC meeting also. – Upside Trigger
- India’s gold demand has remained fragile on record high gold prices in India due to the massively weakened INR, but peak period for Indian gold consumption starting September til December may witness some festive season buying. – Upside Trigger
- Physically backed Gold ETFs are up more than 40 metric tons in August to set record highs. – Upside Trigger
- Gold prices have historically been at the year’s highs during the September to December periods. – Upside Trigger
Crude oil also rallied along with gold, silver and the euro to its highest in three months last week on the NYMEX, mostly from the market’s expectations of fresh eurozone bailouts and a third round of Quantitative Easing from the U.S. Fed. Crude oil supply concerns persist due to the Iran dispute and tensions in Syria, partly also due to the recent refinery fires and also the closing of some refineries in the Northeast.
Iranis yet finding plenty of buyers for its oil production as reported by Reuters, despite imposed sanctions by the western nations. Tropical storm Isaac expected to strengthen to a Category 2 hurricane could trigger sharp upside spikes in crude oil prices if US refineries and offshore oil production get disrupted. In addition, oil may also spike to well above $106.75, if the Fed hints on a timeframe of the soon expected US QE3 on Friday, at the conference from Jackson Hole Fed symposium, or the ECB announces any fresh substantial support/stimulus package on September 6 or again the US Fed announcing clues to the QE3 at the September 13 FOMC meeting, if not done earlier.
Crude oil prices have been seen retreating to $95 from a resistance range around $98.20 to $100, but once this is overcome and sustained; oil prices may rise sharply to over $106.75 to $108.10 also. Historically, gold prices rise in tandem with rising crude oil prices as a hedge against Inflation triggered by higher fuel costs. – Upside Trigger