Gold and silver bounced back from their tumble of the past couple of business days. This may have just been a correction to the sharp fall in their prices. Yesterday, the U.S CPI report was published: the U.S CPI fell by 0.2% in March on account of the drop in energy prices. The core CPI remained stable and inched by 0.1%. This is another indicator for the stability of U.S prices, which could ease the concerns regarding the Fed’s current asset purchase program (for now at least). Housing starts report came out and showed a gain in housing starts during March. Will gold and silver resume their downward trend? Currently, the price of gold is falling. On today’s agenda: Great Britain Claimant Count Change, Minutes of MPC Meeting, German 10 Year Bond Auction, Bank of Canada’s Overnight Rate and Japanese Trade balance.
Here is a short outlook for precious metals for Wednesday, April 17th:
Precious Metals – April Update
On Tuesday, the price of gold bounced back and rose by 1.93% to $1,386.8; silver also increased by 1.14% to $23.63. During April, gold declined by 13.04%; silver, by 16.49%. Usually following such sharp falls in the prices of gold and silver, they tend to rise.
In the chart below are the normalized rates of gold and silver during April (normalized to 100 as of March 28th). The rates of gold and silver have tumbled down in the recent past.
The high movement of both bullion rates is represented in the sharp rise in precious metals prices’ volatility during the month: the standard deviations of gold and silver (daily percent changes) reached 3.06% and 3.78%, respectively – their highest levels in recent years as indicated in the chart below.
Bank of Canada’s Overnight Rate: The Bank of Canada will announce its decision on the Canadian overnight rate, which remained flat in recent years at 1%. The BOC may keep its policy and maintain its interest rate at 1%; the latest slowdown in Canada’s economy might prompt BOC to reduce the rate;
Great Britain Claimant Count Change: This report will present the changes in the number of unemployed in GB; as of the previous month’s report this figure had declined by 1.5k; the rate of unemployment remained unchanged 7.8% in the recent report;
Minutes of MPC Meeting: in the latest MPC meeting, the Bank left the rate unchanged at 0.5% and the asset purchase program at £375 billion; the MPC still has concerns regarding GB’s inflation. The minutes of last week’s meeting might offer some insight behind this decision;
German 10 Year Bond Auction: the German government will issue its monthly with bond auction; in the latest bond auction, which was held at the end March, the average rate reached 1.36% – the lowest rate this year so far;
Japanese Trade balance: The Japanese trade balance deficit for February 2013 rose by 47.4% compared to January, and reach 1,086 billion YEN (roughly $11.08 billion) deficit (seasonally adjusted figures). This rise is due to the higher growth in imports (by 6.8%) than in exports (by 1.3%). Japan is among the leading importers countries of commodities, such as gold;
Currencies / Bullion Market – April Update
The Euro/ USD also rallied on Tuesday by 1.07% to 1.3176. During April, the Euro/USD increased by 2.81%. Moreover, other currencies such as the Aussie dollar and Canadian dollar also appreciated yesterday against the U.S dollar by 0.71% and 0.44%, respectively. The rally of leading currencies against the U.S dollar may have had little to do with the recovery of gold and silver. The correlations among gold, Euro and Aussie dollar strengthened for March/April: the linear correlation between gold and USD/ CAD was -0.59 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.66 (daily percent changes). These correlations suggest the recent recovery of precious metals rates was slightly related to the shifts in the foreign exchange markets.
Current Gold and Silver Rates as of April 17th
Gold (short term delivery) is traded at $1,379 per t oz. an $8.6 or 0.61% decrease as of 03:17*.
Silver (short term delivery) is at $23.65 per t oz – a 0.07% increase as of 03:17*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:30 – Great Britain Claimant Count Change
09:30 – Minutes of MPC Meeting
Tentative – German 10 Year Bond Auction
15:00 – Bank of Canada’s Overnight Rate
23:50 – Japanese Trade balance
Tentative – Spanish 10 Year Bond Auction
13:30 – U.S. Jobless Claims Weekly Report
15:00 – Philly Fed Manufacturing Index
16:00 – BOC Gov Carney Speaks
All Day – G20 Meeting
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