Precious metals changed direction and rallied on Thursday following the decline in the U.S equity markets. The sharp drop in the Japanese equity markets may have dragged down along with it the Japanese yen and other equity markets. In the U.S: new home sales slightly rose by 2.3% in April compared to March; jobless claims fell by 23k to reach 340k. Flash Manufacturing PMI reports for May came out yesterday: Germany’s PMI rose to 49.9; China’s PMI fell to 49.6. These numbers mean the manufacturing sectors in these countries have contracted during May. Will gold and silver resume their downward trend? On today’s agenda: German Business Climate Survey and U.S Core Durable Goods.
Here is a short outlook for precious metals for Friday, May 24th:
Precious Metals – May Update
On Thursday, the price of gold bounced back by 1.78% to $1,391.8; Silver rose by 0.16% to $22.50. During May, gold tumbled down by 5.46%; silver, by 6.83%.
In the chart below are the normalized prices of gold and silver for 2013 (normalized to 100 as of April 30th). The prices of gold and silver haven’t performed well in the past several weeks.
German Business Climate Survey: This survey estimates the developments (on a monthly basis) of the business climate of Germany as of May. In the recent report for April 2013, the business climate index fell from 106.7 in March to 104.4 in April; if this trend will continue, it might pull down the Euro.
U.S Core Durable Goods: This report will refer to the changes in U.S. orders of durable goods in the manufacturing sector for April 2013. This monthly update may indirectly indicate the developments in U.S. demand for commodities such as oil and gas. As of March 2013, new orders of manufactured durable goods decreased to $216.3 billion;
Currencies / Bullion Market – May Update
The Euro/ USD rose on Thursday by 0.58% to 1.2934. During May, the Euro/USD decreased by 1.78%. Moreover, other currencies such as the Aussie dollar also increased yesterday against the U.S dollar by 0.53%. The appreciation of these currencies against the U.S dollar may have contributed to the recent fall of gold and silver yesterday. The correlations among gold, Euro and Aussie dollar remained strong and robust: during May the linear correlation between gold and Euro/USD reached 0.36 (daily percent shifts); the linear correlation between the gold and AUD/USD was 0.49 (daily percent shifts) as seen in the chart below.
Gold (short term delivery) is traded at $1,388.8 per t oz. a $2.9 or 0.21% decrease as of 08:11*.
Silver (short term delivery) is at $22.51 per t oz – a 0.01% decrease as of 08:11*.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
09:00 – German Business Climate Survey
13:30 – U.S Core Durable Goods
For further reading: