Precious Metals Fundamental Analysis – August 3 – August 7, 2015 Forecast – Gold, Silver & Platinum

Analysis and Recommendations:  All three components of the precious metals complex posted inside moves and higher closes on the weekly chart. This chart pattern often suggests a potential shift in momentum to the upside and impending volatility.

Last week, the Fed issued a hawkish monetary policy statement which many traders perceived as an indication that the central bank was on a path towards a September interest rate hike. The U.S. Dollar rallied initially on the news, but sold off sharply on Friday. Gold, silver and platinum prices weakened when the dollar rose, but the selling pressure wasn’t strong enough to take out last week’s low.

Despite Friday’s rally which was probably related to end-of-the-month profit-taking, spot gold finished close to six percent lower for the month. Additionally, it’s been reported that investors took $1.2 billion out of precious metals funds in July.

This week, the complex was able to survive an improvement in second quarter U.S. economic growth and a hawkish Fed statement. The next critical report is Friday’s U.S. Non-Farm Payrolls report due on August 7. There are only two labor reports before the September Fed meeting so there should be a volatile reaction if this report misses its mark. Early estimates predict the economy added 224k new jobs in July.

Technical factors and a weaker dollar could underpin the precious metals complex early in the week. Most of this will likely be position-squaring and profit-taking ahead of the jobs report on Friday. Trader reaction to this report could set the tone for the rest of the month.

If the number misses on the downside then traders may take a September rate hike off the table. This could further weaken the dollar and lead to increased speculative buying and profit-taking in gold, silver and platinum.

If the jobs data trounces the estimate on the upside then look for the precious metals complex to start another leg down especially if the U.S. Dollar pierces $1.00.

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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