The prices of gold and silver changed direction and slipped on Tuesday. Their fall coincided with the depreciation of “risk related currencies” such as the Aussie dollar. Yesterday, Reserve Bank of Australia left its rate unchanged at 2.75% but left the door open for additional rate cuts in the coming months. The U.S trade balance report came out and showed goods and services deficit rose from $37.1 billion to $40.3 billion as of April. Will precious metals change direction and rally today? On today’s agenda: ADP estimate of U.S. non-farm payroll, U.S. ISM Non-Manufacturing PMI, U.S Factory Orders and Australian Trade Balance.
Here is a short outlook for precious metals for Wednesday, June 5th:
Precious Metals – May Update
On Tuesday, gold changed direction and declined by 1.04% to $1,397.1; Silver also fell by 1.37% to $22.41. During the month, gold slightly rose by 0.32%; silver, by 0.81%.
In the chart below are the normalized rates of gold and silver for the past couple of weeks (normalized to 100 as of May 15th). The prices of gold and silver zigzagged in the past several weeks.
The ratio between the two precious metals slightly rose on Tuesday to 62.35. During the month, the ratio slipped by 0.49% as gold slightly under-performed silver.
On Today’s Agenda
ADP estimate of U.S. non-farm payroll: ADP will publish its estimate for the forthcoming U.S non-farm payroll change for May 2013 that will come out on Friday;
U.S. ISM Non-Manufacturing PMI: This monthly update will refer to the changes in the non-manufacturing sector during May 2013. For the last update, this index slipped to 53.1% – thus, the non-manufacturing is expanding and at a slower rate than in the previous month;
U.S Factory Orders: This report will present the developments in U.S. factory orders of manufactured durable goods during May; in the previous report factory orders fell by 4%; this report will offer some insight regarding the growth of the U.S economy;
Australian Trade Balance: The report will pertain to April. In the last update, regarding March, the seasonally adjusted balance of goods and services rose to a $307 million surplus. The export of non-monetary gold fell by $114 million; if the gold exports will continue to fall in March, it might suggest a decline in demand for non-monetary gold (see here recent report);
Currencies / Bullion Market – May Update
The Euro/ USD inched up on Tuesday by 0.04% to 1.3081. During the month, the Euro/USD increased by 0.63%. Conversely, other currencies such as the Aussie dollar and Canadian dollar sharply depreciated yesterday against the U.S dollar by 1.24% and 0.63%, respectively. The correlations among gold, Canadian dollar and Aussie dollar strengthened: during recent weeks the linear correlation between gold and USD/CAD reached -0.48 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.60 (daily percent changes). If these relations will continue to strengthen, the path of the Aussie, Canadian dollar and Euro are likely to pull the direction of precious metals.
Current Gold and Silver Rates as of June 5th
Gold (short term delivery) is traded at $1,404.10 per t oz. a $6.9or 0.49% increase as of 08:16*.
Silver (short term delivery) is at $22.55 per t oz – a 0.61% increase as of 08:16*.
(* GMT)
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
Today
13:15 – ADP estimate of U.S. non-farm payroll
15:00 – U.S. ISM Non-Manufacturing PMI
15:00 – U.S Factory Orders
02:30 – Australian Trade Balance
Tomorrow
Tentative – Spanish 10 Year Bond Auction
11:00– German Industrial Production
12:00 –BOE Rate Decision & Asset Purchase Plan
12:45 – ECB Rate Decision
13:30 – U.S. Jobless Claims
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