Both gold and silver have been weak recently, with gold at around $1810 this morning. There are several factors contributing to this weakness, but mainly, financial markets are  considering a more positive view of the economy and stronger views of end demand both in terms of business investment and consumer spending.

Interest rate expectations are rising, with the consensus now being that the Federal Reserve will raise interest rates at the end of March and again in its May and June meetings. The financial market’s expectations are that interest rates will rise another 75 basis points between now and June, whereas just a month or so ago, the consensus was that interest rates would rise another 25 or maybe 50 basis points and be flat until the end of the year. This is contributing to a stronger dollar, which is also based on a stronger view of the economy and a number of statistics that show relatively strong demand for a number of goods and services.

Precious metals prices have fallen, and CPM Group’s expectation is that they will continue to fall. A strong employment figure on Friday could drop gold’s price down to $1805 or even $1800. CPM Group has been talking for some time about the idea that there is seasonal strength in the first quarter, which dissipated early in the course of February.  In the fourth quarter, higher prices could be seen as CPM Group is expecting a deteriorating political and economic situation both in the United States and on a global basis.

Silver has a similar situation. It got down to about $20.50 this morning, but CPM Group expects it to decline even further, testing  $17.50 or maybe even lower, especially if there is a strong employment report on Friday. CPM Group believes that the price is vulnerable to some extent on the downside, as with gold, and many investors are backing away from it.

In conclusion, the financial markets are expecting interest rates to rise, which is contributing to a stronger dollar and weaker precious metals prices. CPM Group expects gold and silver prices to decline, with a strong employment figure on Friday possibly dropping gold’s price down to $1800. While the first quarter had seasonal strength, it dissipated early in February, and prices might shed water in the top half of last year’s range of prices. In the fourth quarter, higher prices could be seen due to a deteriorating political and economic situation.