The prices of precious metals changed direction and bounced back on Tuesday. Their recovery coincided with the decline in equity markets and the rally of leading risk related currencies such as Euro and Aussie dollar. In Europe, the recent monetary developments reports revealed a rise in M1 and M3. This trend may persist following ECB’s recent interest rate reduction. In Canada, the central bank left its interest rate unchanged at 1%. This was Carney’s last rate decision as BOC governor. As we are existing May more gold and silver contracts are expiring so that the volatility of precious metals prices might rise in the coming days. Will gold and silver continue to rally today? On today’s agenda: Second Estimate of U.S GDP 1Q 2013, U.S. Jobless Claims Italian 10 Year Bond Auction, and U.S. Pending Home Sales.
Here is a short outlook for precious metals for Thursday, May 30th:
Precious Metals – May Update
On Wednesday, gold bounced back by 0.90% to $1,391.3; Silver also rose by 1.17% to $22.44. During the May, gold declined by 5.5%; silver, by 7.06%.
In the chart below are the normalized prices of gold and silver for 2013 (normalized to 100 as of April 15th). The prices of gold and silver mostly fell in recent weeks.
The ratio between the two precious metals slipped on Wednesday to 62. During the month, the ratio rose by 1.69% as gold slightly out-performed silver.
The gold and silver futures volumes of trade have increased on Wednesday to 327 thousand and 31 thousand, respectively. These numbers are much higher than the volume last week. If the volume will continue to rise, this could suggest the volatility of prices of gold and silver due to high volume will increase. The chart below presents the volume of trading gold and silver futures in the CME during May.
On Today’s Agenda
Second Estimate of U.S GDP 1Q 2013: This will be the second estimate of U.S’s first quarter 2013 real GDP growth. In the recent estimate the U.S GDP rose by 2.5% in the first quarter – slightly lower than the rate many had expected; in the fourth quarter the GDP grew by 0.4% (annual terms);. If the growth rate in the first quarter of 2013 will rise above 2.5%,
U.S. Jobless Claims Weekly Report: this weekly report will refer to the shifts in the initial jobless claims for the week ending on May 25th; in the latest report the jobless claims rose by 23k to reach 340k;
U.S. Pending Home Sales: This report shows the changes in pending home sales in the U.S. for April; in the recent report, the pending home sales index rose by 1.5% (M-over-M). These data are another indicator for the developments in America’s housing market;
Italian 10 Year Bond Auction: the Italian government will come up with another bond auction; in the latest bond auction, which was held at the end of April, the average rate fell to 3.94%;
Currencies / Bullion Market – May Update
The Euro/ USD rallied on Wednesday by 0.67% to 1.2942. During May, the Euro/USD decreased by 1.72%. Moreover, other currencies such as the Aussie dollar and Canadian dollar also slightly appreciated yesterday against the U.S dollar by 0.19% and 0.45%, respectively. The correlations among gold, Canadian dollar and Aussie dollar weakened: during May the linear correlation between gold and USD/CAD reached -0.38 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.54 (daily percent changes). If the Aussie, Canadian dollar and Euro continue to rally, they could positively affect precious metals prices.
Current Gold and Silver Rates as of May 30th
Gold (short term delivery) is traded at $1,386 per t oz. a $14.30 or 1.03% increase as of 08:58*.
Silver (short term delivery) is at $22.68 per t oz – a 1.01% increase as of 08:58*.
(* GMT)
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
Today
Tentative – Italian 10 Year Bond Auction
13:30 – Second Estimate of U.S GDP 1Q 2013
13:30 – U.S. Jobless Claims Weekly Report
15:00 – U.S. Pending Home Sales
Tomorrow
08:00 – KOF Economic Barometer
08:00 – German Retail Sales
13:30 – U.S Personal spending
13:30 – Canada’s GDP by Industry
14:55 – UoM Consumer Sentiment
02:00 – China Manufacturing PMI
For further reading:
- Gold and Silver Outlook for June
- Will Gold Recover from its Recent Fall?
- Gold and Silver Outlook for May 27-31
- Weekly Outlook of Financial Markets for May 27-31
- Gold and Silver Yearly Outlook For 2013
- Is the Golden Era of Gold Over?