Precious Metals Fundamental Analysis – August 24 – August 28, 2015 Forecast – Gold, Silver & Platinum

Analysis and Recommendations: 

Precious metals rallied last week, led by gold which closed at its highest level in seven weeks. The market was driven higher by hedgers and speculators. Investors leaving the equity markets parked their profits into gold. Others bought gold against their long stock positions. Some were speculating on the long side, hoping to take advantage of the turbulence in the global economic markets. 

Since investors often buy gold during times of political and economic uncertainty, investors flocked into silver and gold mainly on concerns about China’s economy and its possible impact on other economies. 

Gold also benefited from some investors betting that the problems in China would mean the Federal Reserve would once again delay its first interest rate hike since 2006. 

Although the Fed has been signaling that it remains on track for an interest rate hike this year, the escalating downturn in China’s economy and the turmoil it has caused in the global markets may mean the central bank may have to pass on an early rate hike in September. Last week, China contributed to a huge sell-off in the equity markets after it released a bearish report which showed manufacturing activity had reached a 6 ½ year low in August. 

With the continuing slowdown in China as well-as signs of deceleration in the U.S. recovery, the Fed may keep a rate hike on hold in September. This week’s rally in gold in part suggests that investors are increasing bets it will do so. 

A Fed member speech on Monday could be a market moving event if FOMC Member Lockhart talks about the possible rate hike in September. Starting on Thursday, central bank officials from around the world will discuss policy at the Jackson Hole Symposium. The week wraps up with a speech by FOMC Member Fischer on Saturday. 

Sandwiched in between the Fed speakers will be the U.S. Durable Goods report on Tuesday and Preliminary GDP on Thursday. 

There are no major reports from China, however, there is still the possibility of more activity in the foreign exchange markets especially if China’s equity markets continue to deteriorate. 

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 up to the data analysis and information in our weekly reports.  

 

 

Major Economic Events for the week: 

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