The prices gold and silver kicked off the month on a negative note as both precious metals tumbled down. This recent fall may have been related to the expiry of future contracts as more investors have exited the bullion market. The ongoing debacle in the U.S surrounding the budget continues to keep the US dollar weak but has yet to reflect in a rally for gold and silver. Further, the potential future drop in gold imports in India may loosen the gold market in the near future. Will gold and silver bounce back from their recent tumble? On today’s agenda: Bernanke’s Speech, ECB Rate Decision, Australian Trade Balance, GB Construction PMI, Spain’s unemployment Change, ADP estimate of U.S. non-farm payroll. Here is a short overview for precious metals for Wednesday, September 2nd:
Gold and Silver Prices Recap – October Update
On Tuesday, gold tumbled down by 3.08% to $1,285.9; Silver also plummeted by 2.46% to $21.15. During the week, gold decreased by 3.92%; silver, by 2.90%. In the chart below are the normalized rates of bullion for 2013 (normalized to 100 as of August 30th). The prices of gold and silver have tumbled down in recent weeks. 
The ratio between the two precious metals slipped on Tuesday to 61.19. During the week, the ratio decreased by 1.05% as silver has slightly out-performed gold. 
On Today’s Agenda:
Australian Trade Balance: The upcoming report will refer to August. In the last update, for July, the seasonally adjusted balance of goods and services fell to a $765 million deficit. The export of non-monetary gold decreased by $219 million; if gold exports further fall, it might suggest a drop in demand for non-monetary gold (see here latest update);
Spain‘s unemployment Change: The number of people unemployed in Spain remained virtually unchanged in August. This mean, the employment situation in Spain hasn’t improved. If in the upcoming report the number of unemployed resumes its downward trend, this may pressure up the Euro;
GB Construction PMI: Great Britain’s construction sector in August 2013 improved again as the PMI sharply increased to 59.1 – the construction sector is progressing at a faster pace. The upcoming report will refer to September;
ECB Rate Decision: ECB will announce of any developments in its monetary policy and economic outlook as of October. The current expectations are that ECB will leave its interest rate unchanged at 0.5%. ECB President Draghi will also refer to ECB’s forward looking analysis. If Draghi changes his tone from last month’s meeting, this press conference could stir up the forex market;
ADP estimate of U.S. non-farm payroll: ADP will publish its estimate for the next U.S non-farm payroll changes for September 2013 that will come out on Friday;
Bernanke’s Speech: Chairman of the Federal Reserve Ben Bernanke will give brief welcoming remarks at the Federal Reserve/Conference of State Bank Supervisors Community. If Bernanke were to refer to the Fed’s policy or the market’s reaction to the September FOMC meeting, this speech may stir up the financial markets;
Currencies / Precious Metals– October Update
On Tuesday, the Euro/ USD currency pair rose by 0.28% to 1.3528. During the week, the Euro/USD inched up by 0.03%. Further, other currencies such as the Canadian dollar and Aussie dollar appreciated yesterday against the U.S dollar by 0.14% and 1.13%, respectively. The correlations among gold, Euro and Aussie have weakened in recent weeks, e.g. the correlation between the Euro/USD and gold price is 0.18 during September/October.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
Today 02:30 – Australian Trade Balance
08:00 – Spain’s unemployment Change
09:30 – GB Construction PMI
12:45 – ECB Rate Decision
13:15 – ADP estimate of U.S. non-farm payroll
20:30 – Bernanke’s Speech
Tomorrow
09:30 – GB Services PMI 10:00 – EU Retail Sales
13:30 – U.S. Jobless Claims
15:00 – U.S. ISM Non-Manufacturing PMI
15:00 – U.S Factory Orders For further reading:
- Gold and Silver Prices Outlook for October 2013
- Gold and Silver Weekly Forecast for September 30- October 4
- Weekly Outlook of Financial Markets for September 30- October 4
- Gold and Silver Yearly Outlook For 2013