Gold Monthly Fundamental Forecast May 2013

Outlook and Recommendation

Gold  started to rebound ending the month at 1475.75 after falling close to 200 points in a record daily fall. Gold will face a lot of pressure the beginning of May. Gold and silver prices tumbled down during April.  The minutes of the FOMC meeting may have been the trigger for the sharpest fall in the prices of bullion in a single day in recent decades. Other contributing factors may have been the negative report of Goldman Sachs about gold, and the slowdown in growth in China – among the leading countries in importing gold and silver. Even the ongoing rise in the U.S money base, partly due to the FOMC’s QE3 program, doesn’t seem to help rally gold and silver prices.

Gold and silver changed course and rallied during last week. Was the recent rally a correction to the plunge in precious metals prices from the previous week? Was it a shift in market sentiment? Or was it a short term rally that will soon change course again? Along with gold and silver, other commodities also rose including the price of oil. The rally of commodities along with the weak performance in equities markets during last week might suggest that some investors have reinvested their funds in commodities. Last week’s U.S reports showed a mixed signal regarding the progress of the U.S economy: The core durable goods fell by 1.4% in the past month; new home sales slightly rose by 1.5%; the U.S GDP grew in the first quarter of 2013 by 2.5% – lower than the rate many economists had expected. This mixed signal may have contributed to the high volatility of gold and silver during last week.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Central Bank – Fed Reserve

Date of next meeting or last meeting: May 01, 2013

Current Rate: 0.00-0.25%

Economic events for the month of February affecting EUR, CHF, GBP and USD