Yesterday the markets in the U.S were closed but the forex markets experienced high volatility mainly in Europe following the ECB and BOE rate decisions. These central banks left their cash rates unchanged but they presented guidelines for future low rates that may further fall in the coming months. These factors may have contributed to the sharp drop in Euro and GBP against the USD. Today, forex and commodities markets are likely to stir up as the U.S non-farm payroll report will come out (update: 195k jobs were added). Will precious metals tumble down? On today’s agenda: German Factory Orders, Canada’s Employment Report, and Canada’s Ivey PMI.
Here is a short outlook for precious metals for Friday, July 5th:
Precious Metals – July Update
During the week (up to date) gold rose by 2.3% and reached $1,251.9; Silver also increased by 1.25% to $19.694. During July, gold increased by 2.3%; silver, by 1.25%.
In the chart below are the normalized prices of gold and silver for 2013 (normalized to 100 as of June 18th). The rates of gold and silver moved in an unclear trend during the week.
The gold and silver futures volumes of trade have declined on Thursday to 187 thousand and 40 thousand, respectively. These numbers are lower than the volume traded a couple of weeks back. If the volume will rise today, this could suggest the odds of sudden sharp changes in the prices of gold and silver due to high volume will rise.
On Today’s Agenda
U.S. Non-Farm Payroll Report: in the latest update for May 2013, the labor market rose again: the number of non-farm payroll employment rose by 175k; the U.S unemployment rate inched up to 7.6%; According to ADP, 188k jobs were added in June. If in the upcoming report the employment will rise again by over 190 thousand, this may slash again the prices of gold and silver (see here my last review on the U.S employment report);
German Factory Orders: This report will refer to the changes in the Germany’s factory orders for June; in the latest report the German factory orders declined by 2.3% (M-O-M);
Canada‘s Employment Report: In the latest employment update for May 2013, unemployment inched down to 7.1%; the employment rose by 95k during the month. The forthcoming report might affect the Canadian dollar;
Canada‘s Ivey PMI: This report shows the diffusion index based on surveyed purchasing managers; in the last month’s update, the index rose to 63.1;
Currencies / Bullion Market – July Update
The Euro/ USD currency pair changed direction and fell on Thursday by 0.73% to 1.2914. During July, the Euro/USD slipped by 0.74%. The British pound also fell yesterday following yesterday’s BOE press conference. Conversely, other currencies such as the Aussie dollar appreciated yesterday against the U.S dollar by 0.66%. The relations among silver, gold, Euro and Aussie dollar weakened, e.g. the correlation between the Euro/USD and gold price is 0.48 during June-July. If these correlations will further weaken, the changes of the Aussie, Euro and Canadian dollar against the USD are likely to have a lesser effect on gold and silver prices.
Current Gold and Silver Rates as of July 5th
Gold (short term delivery) is traded at $1,244.10 per t oz. a $9.8 or 0.78% decrease as of 07:34*.
Silver (short term delivery) is at $19.20 per t oz – a 2.56% decrease as of 07:34*.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
11:00 – German Factory Orders
13:30 – Canada’s Employment Report
13:30 – U.S. Non-Farm Payroll Report
15:00 – Canada’s Ivey PMI
For further reading: