The prices of gold and silver changed direction and slipped on the first day of the week after they had spiked during the previous week. The recent fall in the prices of gold and silver coincided with the decline of other commodities such as oil. Looking forward, the upcoming publication of the minutes of the latest FOMC meeting might stir up the bullion market. Until then, precious metals prices might not move much. On today’s agenda: Minutes of Reserve Bank of Australia’s Monetary Policy Meeting and German PPI.
Here is a short outlay for bullion for Tuesday, August 20th:
Gold and Silver Review – August Review
On Monday, gold declined by 0.41% to $1,365.60; Silver also slipped by 0.67% to $23.17. During August, gold rose by 4.48%; silver jumped by 18.82%.
In the chart below are the normalized rates of precious metals for 2013 (normalized to 100 as of July 31st). The prices of gold and silver have spiked during August.
The ratio between the two precious metals slightly rose on Monday to 58.95. During August, the ratio fell by 12.07% as silver out-performed gold.
The gold and silver futures volumes of trade have declined and reached on Monday 135 thousand and 59 thousand, respectively – the lowest level in the past several days. If the volume will pick up this week, this could suggest the odds of sudden sharp movement in the prices of gold and silver due to high volume will rise.
See here the weekly outlook for gold and silver for August 19-23.
On Today’s Agenda
Minutes of Reserve Bank of Australia’s Monetary Policy Meeting: The Reserve Bank of Australia lowered its interest rate by 0.25pp to 2.50%; the minutes of the recent monetary policy meeting may offer some additional information behind its latest decision; this news may affect the Australian dollar and consequently bullion prices;
German PPI: According to the recent report for June, the PPI remained unchanged. This report might affect the direction of the Euro, which is also correlated with precious metals rates;
Currencies / Precious Metals– August Update
The Euro/ USD currency pair inched up on Monday by 0.05% to 1.335. During the month so far, the Euro/USD slightly increased by 0.2%. Conversely, other currencies such as the Aussie dollar and Japanese yen depreciated yesterday against the U.S dollar by 0.83% and 0.02%, respectively. The correlations among gold, Euro and Aussie dollar have weakened, e.g. the correlation between the Euro/USD and gold price is 0.47 during July-August. If the correlations will continue to shrink, this could suggest the effect the forex market has on bullion market will diminish.
Gold (short term delivery) is traded at $1,357.40 per t oz. a $8.3 or 0.61% decrease as of 07:07*.
Silver (short term delivery) is at $22.60 per t oz – a 2.65% decrease as of 07:07*.
Here is a breakdown of the top events and publications that are scheduled for today and tomorrow (all times GMT):
00:30 – Minutes of Reserve Bank of Australia’s Monetary Policy Meeting
13:00 – German PPI
09:30 – Great Britain Net borrowing
15:00 – U.S. Existing Home Sales
19:00 – Minutes of the last FOMC Meeting
For further reading: