The prices gold and silver changed direction and slipped on the first day of the week after they had risen during the past couple of weeks. Major commodities and stocks also declined on Monday. The bullion market seems to have passed through the announcement of the FOMC to start QE3, and is already focused on the recent developments in Europe and Asia. On today’s agenda: Great Britain CPI, German ZEW economic sentiment, BOE Inflation letter, U.S. TIC Long Term Purchases and FOMC member Lacker’s Speech .
Here is a short outlook for precious metals for Tuesday, September 18th:
Precious Metals –September Update
On Monday, Gold edged down by 0.12% to $1,770.6; Silver also slipped by 0.83% to $34.37. During the month, gold increased by 4.92%; silver, by 9.3%.
As seen below, the chart shows the developments of normalized prices of precious metals in the last several weeks (normalized to 100 as of August 31st). During recent weeks gold and silver have had a sharp upward trend.
The ratio between the two precious metals edged up on Monday to 51.52. During September the ratio fell by 4% as gold under-performed silver.
On Today’s Agenda
Bank of Japan –Monetary Policy Statement: Bank of Japan will announce its interest rate and monetary policy for the September. Up to now, BOJ left the interest rate unchanged at 0 to 0.1 percent. There are renewed speculations that BOJ will introduce a new quantitative easing plan. In such a case, it could affect the Yen and commodities;
FOMC member Lacker’s Speech: Following last week’s FOMC decision to issue QE3, in which Lacker was the only member that opposed this decision, it will be interesting to see his position in regards to the FOMC’s decision. The title of the speech is “Maximum Employment and Monetary Policy “;
German ZEW economic sentiment: The upcoming publication will refer to the ZEW indicator of economic sentiment for Germany for September. During August the ZEW indicator for Germany fell to -25.5 points; if Germany’s economic sentiment will continue to dwindle, the Euro will plausibly remain weak against other currencies;
U.S. TIC Long Term Purchases: The Treasury International Capital report will show the shifts in the purchases and sales of US long term treasuries in July 2012. In the previous report regarding June 2012, the net foreign sales of U.S Treasuries longer-term notes reached $9.3 billion;
Great Britain CPI: some expect the July inflation will further decline; in the recent report regarding July the annual CPI rose from 2.4% to 2.6%; this news may affect the British pound;
BOE Inflation Estimate: this report will present the yearly rate of GB’s inflation according to Bank of England and will be published as a letter only if the inflation is above 3% or below 1%;
Currencies / Bullion Market – September Update
The Euro/ USD declined on Monday by 0.09% to 1.3117. During the month, the Euro/USD rose by 4.28%. Further, other currencies including Aussie dollar also depreciated on Monday against the USD by 0.68%. The linear correlation between gold and Euro is still mid-strong: during the month, the correlation between the gold and EURO/USD was 0.55 (daily percent changes). The relation between gold and Aussie dollar it’s 0.49.
Current Gold and Silver Rates as of September 18th
Gold (October 2012 delivery) is traded at $1,764.6 per t oz. a $6 or 0.34% decrease as of 23:19*.
Silver (October 2012 delivery) is at $34.29 per t oz – a $0.077 or 0.22% decrease as of 23:18*.
Daily Outlook for September 18th
The prices of precious metals didn’t do much on the first day of the week as they have edged down while major commodities and stock declined. The speculations around the debt raising of Spain and the next move of the ECB is keeping the uncertainty around the Euro high, which is also affecting bullion rates. The speculations in Asia around the future steps of People Bank of China and Bank of Japan about each Bank’s monetary measures it will take to stimulus its respective economy could affect not only the forex markets but also commodities markets. The upcoming reports to come out regarding Great Britain CPI, German ZEW economic sentiment, U.S. TIC Long Term Purchases could affect their respective currency if the reports will show a significant change. Finally, if the Euro and other “risk currencies” will continue to pull back from their rally of the past couple of weeks, this could also adversely affect bullion rates.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:30 – Great Britain CPI
10:00 –German ZEW economic sentiment
Tentative – BOE Inflation Estimate
14:00 – U.S. TIC Long Term Purchases
00:45 – FOMC member Lacker’s Speech
09:30 – MPC Meeting Minutes
13:30 – U.S. Housing Starts
13:30 – U.S. Building Permits
00:50 – Japanese Trade balance
03:30– China flash Manufacturing PMI
For further reading: