The high volatility in the financial markets including forex and commodities during yesterday’s trading may have stemmed, in part, by the recent publication of the minutes of the FOMC meeting and Bernanke’s speech. The dovish remarks of Bernanke may have put the tapering course of action back into the bottle. The current market guess is that the Fed may not taper QE3 in the coming months. The USD tumbled down against leading currencies including yen and Euro. Gold and silver prices also sharply rose but by the end of the day pulled back. Currently, however, precious metals prices are sharply rising. Will this rally continue? On today’s agenda: Japan’s monetary policy meeting, China New Loans, Australia Employment Report, ECB Monthly Bulletin, U.S. Jobless Claims and U.S. Federal Budget Balance .
Here is a short outlook for bullion for Thursday, July 11th:
Gold and Silver Prices Overview – July Update
On Wednesday, gold slightly rose by 0.12% to $1,247.4; Silver also moderately increased by 0.14% to $19.16. During July, gold rose by 1.93%; silver slipped by 1.52%.
In the chart below are the normalized prices of gold and silver for 2013 (normalized to 100 as of June 18th). The prices of gold and silver have increased in recent days.
The ratio between the two precious metals inched down on Wednesday to 65.12. During July, the ratio rose by 3.50% as gold slightly out-performed silver.
Herein is the weekly forecast for gold and silver for July 8-12.
On Today’s Agenda
U.S. Jobless Claims Weekly Report: in the recent report the jobless claims fell by 5k to reach 343k; this upcoming weekly report may affect precious metals;
U.S. Federal Budget Balance: this upcoming report will pertain to June 2013; this report indicates the government debt growth and thus may affect the U.S dollar. In the previous report regarding May the deficit rose by $138.7 billion; if the deficit will continue to expand, it could influence U.S policymakers to make additional cuts to the budget;
Japan’s monetary policy meeting and press conference:Japan’s monetary policy meeting will be held. BOJ members will decide on any changes to the bank’s current asset purchase program. These decisions could affect the Japanese yen;
China New Loans: This report will refer to the recent changes in China’s new loans. Based on the recent update, the total loans rose again for the third consecutive month; this report is another indicator for China’s economic growth;
Australia Employment Report: in the last report regarding May 2013 the rate of unemployment remained at 5.5%; the number of employed (seasonally adjusted) slightly rose by 1,100 people. This report could affect the Aussie dollar (see here the recent report);
ECB Monthly Bulletin: This monthly report for June analyzes the economic changes of the Euro Area such as the price stability, interest rate decisions and governments’ debt; this update may provide some perspective on the outlooks of the EU progress;
Currencies / Bullion Market – July Update
The Euro/ USD bounced back and sharply rose by 1.55% on Wednesday to 1.2979 – the highest level this week. This currency pair’s rally was following Bernanke’s remarks regarding the asset purchase program. During July, the Euro/USD slipped by 0. 24%. Moreover, other currencies such as the Japanese yen also sharply appreciated again yesterday against the U.S dollar by 1.45%. The correlations among gold, Euro and Aussie dollar strengthened in recent weeks, e.g. the relation between the Euro/USD and gold price is 0.42 during recent weeks. The table below presents the correlations among precious metals and leading currency pairs.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
Today
Tentative – Japan’s monetary policy meeting and press conference
Tentative – China New Loans
02:30 – Australia Employment Report
09:00 – ECB Monthly Bulletin
13:30 – U.S. Jobless Claims
19:00 –U.S. Federal Budget Balance
Tomorrow
13:30 – U.S. Producer Price Index
14:55 – UoM Consumer Sentiment
For further reading:
- Gold and Silver Outlook for July
- Will Gold Recover from its Recent Fall?
- Gold and Silver Outlook for July 8-12
- Weekly Outlook of Financial Markets for July 8-12
- Euro/USD Weekly Overview for July 8-12
- Gold and Silver Yearly Outlook For 2013