The Greek drama continues, but for the financial markets the impact of the Greek debt crisis has weakened. Gold and silver prices took a sharp hit to the chin in the past week. Between the recovery of the USD and the weakness in China – bullion prices dropped. This week is likely to be less volatile and should suggest gold and silver prices won’t move from their current levels. The main reports that will be released this week include new and existing home sales in the U.S., EU manufacturing PMI, China’s new loans and Great Britain retail sales. The following week, however, could be much more turbulent with the U.S. GDP for Q1 and FOMC’s meeting.
Now that the Greek debt crisis is, for now, less in the news, market volatility could come back down. This could also mean the sharp movements in the forex and commodities markets may subside. The recent hit gold and silver took may have been, in part, driven by rally of the U.S. dollar. This week, however, we don’t have many important economic reports vis-à-vis the U.S. economy, so the U.S. dollar isn’t likely to do much this week. In the following week, however, the FOMC meeting and U.S. GDP for Q2 could stir up the bullion market again.
As of the end of last week, the implied probabilities in the bonds market slightly rose again: The probability of a rate hike in September slightly rose to 17% and for December — 57%.
By the end of the week, gold holdings in the GLD ETF dropped again by 2.25% to 696.25; The ETF’s gold holding are down by 1.6% for the year, year-to-date.
Final note
The recent plunge in the gold and silver market may have been another reaction to the recovery of the USD. This week, however, gold and silver prices aren’t likely to do much. Until the next FOMC meeting, bullion prices aren’t expected to move from their current low levels.
For further reading see: