Gold and Silver Prices Monthly Outlook for July 2012

Here are several factors that may have contributed to the decline of gold and silver prices during June:

1. The FOMC decision to extend operation twist throughout the rest of 2012; this means no QE3 for now;
2. The concerns over Spanish debt crisis;
3. The testimony of Bernanke on June 8^th in which he cooled down the speculations around another QE program;
4. The deprecation in major currencies including Euro, Aussie dollar during parts of the month;
5. The positive news from the U.S economy mainly in the housing market;

Here are several factors that may have contributed to the rise of gold and silver during the month:

1. The renewed confidence in the EU after the EU leaders had decided to offer struggling banks loans from the rescue fund so that countries such as Spain won’t have to raise money to bail banks (see below for more);
2. The rise of the Euro/USD during the first part of the month;
3. The U.S labor report of June showed a modest gain in U.S. employment of only 69k; this report is usually negatively correlated with gold and silver prices (see below);
4. The ongoing FOMC pledge to keep rates low until late 2014;
5. The news regarding the contraction  in the U.S Philly Fed Index;
6. The U.S. federal deficit expanded by 124 billion during May 2012; this expansion raises a bit the uncertainty level in the market;

In conclusion, I speculate gold and silver will start to pick up again. The U.S economy might not show much progress which tends to positively correlated with bullion rates. The upcoming U.S labor report could have some impact on the bullion market. The renewed ease over the EU debt crisis might pull up the Euro which is strongly and positively linked with precious metals prices. The upcoming FOMC meeting and the minutes of the June FOMC meeting aren’t likely to do much worse to gold and silver than the June FOMC meeting had already done. I suspect all these items mount up to bullion trading up but not by much. Finally, if major currencies including Euro and Aussie dollar will continue to trade up against the USD, bullion rate are likely to follow and also rise. Nevertheless, as long as the FOMC won’t announce of another QE program I suspect bullion rates will remain in their respective ranges. 

Source; http://www.tradingnrg.com/silver-price-forecast-gold-prices-outlook-for-july-2012/