The prices gold and silver declined yesterday and thus since September 14th, following the announcement of the FOMC to launch QE3, the price of silver fell by 2.07% and gold by 1.08%. The same goes for the Euro and other “risk currencies” that have also declined in the past couple of weeks. The recent developments in Spain and Greece may have contributed to the weak Euro. There are reports that Spain has introduce additional austerity plans. Despite the recent fall in precious metals rates Hedge funds continue to raise their bets on silver. The U.S new home sales edged down in August by 0.3%. Currently the gold and silver are rising. On today’s agenda: U.S Core Durable Goods, U.S GDP second quarter (Update: U.S GDP rose by only 1.3% in Q2), U.S. Pending Home Sales, Great Britain Current Account, China’s revised Manufacturing PMI, Italian 10 Year Bond Auction, Euro Area Monetary Development and U.S. Jobless Claims (update: U.S jobless declined by 26k to 359k). Here is a short outlook for precious metals for Thursday, September 27th:
Precious Metals –September Update
On Wednesday, Gold declined by 0.72% to $1,753.6; Silver also fell by 0.02% to $33.94. During September, gold rose by 4.67%; silver, by 7.97%.
As seen below, the chart shows the shifts 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 have slightly declined.
The ratio between the two precious metals also declined on Wednesday to 51.67. During September, the ratio declined by 3.74% as gold slightly under-performed silver.
On Today’s Agenda
U.S Core Durable Goods: This report may indirectly show the changes in U.S. demand for commodities such as crude oil. As of July 2012, new orders of manufactured durable goods rose by $9.4 billion to $230.7 billion; if this report will continue to be positive then it could pull up not only the US dollar but also commodities prices;
Final U.S GDP 2Q 2012 Estimate: In the recent estimate the U.S GDP in the second quarter grew by 1.7%; in the 1Q2012 the GDP growth rate was 1.9%. This shows a decrease in the growth rate for the US’s GDP. If there will be a sharp shift in this estimate it could also affect not only the US dollar but also commodities. Update: U.S GDP grew by only 1.3%. This news raises the chances of the Fed to introduce new stimulus plans.
Euro Area Monetary Development: In the previous July report, the annual growth rate for M3 rose to 3.8%; M1 also increased to 4.5%. Finally, the annual growth rate of loans to private sector edged up to 0.1%. This news may affect the Euro/USD and consequently commodities rates;
Great Britain Current Account: This will report will show recent changes in the balance of payment of Great Britain that reached, according to the recent report, to 11.2 billion pound; this report may affect the GBP/USD currency;
U.S. Jobless Claims Weekly Report: in the recent report the jobless claims slipped by 3k to 382,000; this upcoming weekly report may affect the U.S dollar and consequently the rates of commodities;
Italian 10 Year Bond Auction: the Italian government will issue another bond auction; in the recent bond auction, which was held at the last week of August, the average rate reached 5.82%; if the yields will continue to fall, it could indicate a rise in confidence in the EU economy;
U.S. Pending Home Sales: in the recent report the pending home sales index rose by 2.4% (M-over-M). These data are another indicator for the changes in America’s real estate market; based on last week’s results on housing starts the pending sales may continue to rise. In such a case US dollar may rally;
China’s revised Manufacturing PMI: according to last week’s HSBC Manufacturing PMI flash report for September 2012 the Manufacturing PMI edged up to 47.8, which means the manufacturing conditions are still contracting; if this negative index will continue, this may adversely affect commodities, unless China will act to stimulate its economy;
Currencies / Bullion Market – September Update
The Euro/ USD declined again yesterday and thus decreased for the third consecutive day; on Wednesday if fell by 0.2% to 1.2899. During September, however the Euro/USD increased by 2.34%, mainly during the first couple of weeks of the month. Further, other currencies including Aussie dollar and Canadian dollar also depreciated yesterday against the USD by 0.18% and 0.5%, respectively. There are still strong linear correlations among Euro, Aussie dollar and Canadian dollar and precious metals rates: during the month, the linear correlation between the gold and EURO/USD reached 0.6; between gold and USD/Canadian dollar, -0.56 (daily percent changes). Following the recent bearish market sentiment towards the “risk currencies”, mainly due to the uncertainty around Spain and Greece, if the bearish market sentiment will progress, it is likely to drag down gold and silver from rising.
Current Gold and Silver Rates as of September 27th
Gold (October 2012 delivery) is traded at $1,758.4 per t oz. a $4.8 or 0.27% increase as of 06:21*.
Silver (October 2012 delivery) is at $34.1 per t oz – a $0.16 or 0.47% increase as of 06:21*.
Daily Outlook for September 27th
The prices of precious metals declined in recent weeks as the memories of the FOMC’s announcement of QE3 have dissipated. The recent riots in Spain and Greece regarding he budget cuts and political uncertainty is likely to keep the Euro weak and thus could also adversely affect bullion rates. Today’s Italian bond auction might partly ease the recent bearish market sentiment in the Euro Area if the auction will go well. 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 China will hint of its intent to add additional stimulus. Today’s publication of U.S Jobless Claims, core curable goods, pending home sales and GDP for Q2 could affect the US dollar as indicated above. Finally, if the Euro Aussie dollar and Canadian dollar will continue to fall, 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):
09:00 – Euro Area Monetary Development
09:30 – Great Britain Current Account
13:30 – U.S. Jobless Claims Weekly Report
Tentative – Italian 10 Year Bond Auction
13:30 – U.S Core Durable Goods
13:30 – Final U.S GDP 2Q 2012 Estimate
15:00 – U.S. Pending Home Sales
03:30– China’s revised Manufacturing PMI
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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