The prices gold and silver declined on the first day of the week along with other commodities and foreign exchange rates such as Euro and Aussie dollar. The Euro market is still waiting for Spain to request the ECB to commence its bond purchase program. The announcement of the FOMC to launch QE3 seems to have dissipated. Did yesterday’s falls were a bit sharp that could result in a correction? On today’s agenda: German Consumer Climate, ECB President Speech, Canada’s Retails Sales and U.S Consumer Confidence.
Here is a short outlook for precious metals for Tuesday, September 25th:
Precious Metals –September Update
On Monday, Gold declined by 0.75% to $1,764; Silver also tumbled down by 1.89% to $33.98. During September, gold increased by 4.56%; silver, by 8.08%.
As seen below, the chart presents the shifts of normalized prices of precious metals in the last several weeks (normalized to 100 as of August 31st). During last week, the rates of gold and silver remained flat.
On Today’s Agenda
U.S Consumer Confidence: according to the recent monthly update, the consumer confidence index fell in August (M-o-M). The current expectations are that the September index may rise; this report might affect commodities markets;
German Consumer Climate: Gfk group will publish their German consumer climate index. If this report will remain positive it might also positively affect on the Euro;
Canada’s Retails Sales: This report will show the shifts in the retails sales in Canada during July 2012. It may affect the direction of USD/CAD currency pair, which is strongly linked with commodities rates. In the previous report regarding June, retails sales declined by 0.4%;
ECB President Talks: Mario Draghi will talk in an annual event “Day of the German Industries”. In his speech he might refer to the future monetary steps the ECB will take. This speech might affect the Euro to US dollar exchange rate;
Currencies / Bullion Market – September Update
The Euro/ USD declined on Monday by 0.39% to 1.2931. During the month, however the Euro/USD rose by 2.8%. Further, other currencies including Aussie dollar also depreciated yesterday against the USD by 0.3%. As indicated in the chart below, there are still strong linear correlations among Euro, Aussie dollar, Canadian dollar and precious metals rates: during August/September, the linear correlation between the gold and EURO/USD reached 0.64 (daily percent changes). Following the recent shift in the market sentiment, if the bearish market sentiment towards the Euro and other risk currencies will continue, it is likely to further drag down gold and silver.
Current Gold and Silver Rates as of September 25th
Gold (October 2012 delivery) is traded at $1,767.3 per t oz. a $3 or 0.17% increase as of 23:25*.
Silver (October 2012 delivery) is at $34.085 per t oz – a $0.101 or 0.3% increase as of 23:25*.
Daily Outlook for September 25th
The prices of precious metals didn’t move much last week and they have started off the week falling along with the rest of the commodities markets. The bearish market sentiment in the Euro Area might continue to affect not only the Euro/USD but also commodities rates. Today’s publications including Canada’s retail sales, German consumer climate and U.S consumer confidence could affect the Canadian dollar, Euro and US dollar, respectively as indicated above. China’s money rate hiked to a 7-month high plausibility due to a shortage in cash. Finally, if the Euro will continue to fall, this could pull down bullion rates.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
07:00 – German Consumer Climate
13:30 –Retails Sales Canada
14:00 – ECB President Speech
15:00 – U.S Consumer Confidence
Tentative – German 10 Year Bond Auction
15:00 – U.S. New Home Sales
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