Following the decline of precious metals during most of the week, they have changed direction as both gold and silver prices pulled up on Thursday along with the rest of the market including oil prices, the Euro and major stock markets. This rally came despite the lower than anticipated growth in GDP for the U.S during the second quarter 2012. The recent news from Spain that the country is ready to pass new austerity plans may have contributed to the rally of the Euro. U.S jobless claims declined by 26k; this news may have also helped rally the commodities and stock markets. Currently, gold is falling. On today’s agenda: German Retail Sales, KOF Economic Barometer, Canada’s GDP by Industry and UoM Consumer Sentiment.
Here is a short outlook for precious metals for Friday, September 28th:
Precious Metals –September Update
On Thursday, Gold changed direction and hiked by 1.53% to $1,780.5; Silver also rose by 2.14% to $34.67. During September, gold increased by 5.5%; silver, by 10.25%.
As seen below, the chart shows the changes of normalized prices of precious metals during September (normalized to 100 as of August 31st). During the past couple of weeks the rates of gold and silver remained nearly unchanged and as they have changed direction with an unclear trend.
The ratio between the two precious metals declined on Thursday to 51.36. During September, the ratio declined by 4.31% as gold slightly under-performed silver.
On Today’s Agenda
German Retail Sales: In August, retail sales declined by 0.9%; if this report will remain negative then it might weaken the Euro;
KOF Economic Barometer: this report provides an outlook of the Swiss economy in the months to come. In the previous press release, the report predicted that the Swiss Economy is headed towards an expansion in 2012;
Canada’s GDP by Industry: the report will refer to the shifts in major industrial sectors for July 2012. In the previous report regarding June 2012, the real gross domestic product edged up by 0.2%. This report may affect the strength of the Canadian dollar currency which is strongly correlated with commodities;
UoM Consumer Sentiment (revised): University of Michigan will issue its revised consumer sentiment survey; this survey could offer another insight to recent developments in U.S consumers sentiment about the economy; last time the sentiment index increased to 74.3;
Currencies / Bullion Market – September Update
The Euro/ USD also changed direction and rallied yesterday and thus broke a three day consecutive days of falls; on Thursday it rose by 0.32% to 1.2914. During the month, the Euro/USD increased by 2.66%. Further, other currencies including Aussie dollar and Canadian dollar also appreciated yesterday against the USD by 0.68% and 0.51%, respectively. There are still strong linear correlations among Euro, Aussie dollar and Canadian dollar and precious metals prices: during September, the linear correlation between the gold and EURO/USD reached 0.56; between gold and Aussie dollar/ USD, 0.51 (daily percent changes). Following the recent changed in the bearish market sentiment towards the “risk currencies”, if the bearish market sentiment dissipate, it is likely to keep pulling up gold and silver.
Current Gold and Silver Rates as of September 28th
Gold (October 2012 delivery) is traded at $1,779.7 per t oz. a $0.8 or 0.04% decrease as of 23:43*.
Silver (October 2012 delivery) is at $34.705 per t oz – a $0.039 or 0.11% increase as of 23:42*.
Daily Outlook for September 28th
The recent positive news from Spain about the budget cuts may have helped curb the fall of the Euro and thus also pulled up commodities prices. The recent positive news of the U.S jobless claims may have also helped not only stock markets but also commodities markets. On the other hand, the U.S GDP may have raised the expectations that QE3 will continue for a long time and the Fed might even introduce additional plans in the near future. China’s manufacturing PMI could affect commodities prices: if the report will continue to fall and will be below the 50 mark it could adversely affect commodities rates unless of course this will raise the speculations that China will initiate additional stimulus. Today’s publication of German Retail Sales, KOF Economic Barometer Canada’s GDP by Industry and UoM Consumer Sentiment could affect the Euro, CAD and USD, respectively as indicated above. Finally, I still think that gold and silver will remain at the currently high level and even continue their rally.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
07:00 – German Retail Sales
08:00 – KOF Economic Barometer
13:30 – Canada’s GDP by Industry
14:55 – UoM Consumer Sentiment
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