Gold and silver resumed their downward trend and tumbled down yesterday. Their fall coincided with the depreciation of several currencies against the USD including Euro. Following Tuesday’s reports that showed growth in the U.S economy, yesterday the last update of the U.S GDP came out. The report was revised downward to a quarterly growth rate of 1.8%. This news didn’t curb the rally of equities markets but may contribute to precious metals’ rally on today’s trading. Will gold and silver prices continue to decline? On today’s agenda: Euro Area Monetary Development, GB Current Account, Final GB estimate of GDP for 1Q 2013, U.S. Jobless Claims, U.S. Pending Home Sales, Italian 10 Year Bond auction, and EU Economic Summit.
Here is a short outlook for precious metals for Thursday, June 27th:
Precious Metals – June Update
On Wednesday, gold sharply fell by 3.55% to $1,229.6; Silver also tumbled down by 4.81% to $18.59. During June, gold declined by 11.70%; silver, by 16.38%.
In the chart below are the normalized rates of precious metals for 2013 (normalized to 100 as of May 31st). The rates of gold and silver sharply fell during June.
The gold and silver futures volumes of trade have risen on Wednesday to 352 thousand and 156 thousand, respectively. These numbers are higher than the volume traded in the past several days. If the volume will remain high today, this could suggest the odds of sudden sharp changes in the prices of gold and silver due to high volume will rise. The chart below presents the volume of trading gold and silver futures in the CME during the month.
Euro Area Monetary Development: In April report, the annual growth rate for M3 rose to 3.2%; M1 increased to 8.7%. Finally, the annual growth rate of loans to private sector reached -0.9%. This news suggests the EU inflation might start to pick up even though loans continue to dwindle. Perhaps part of the rise in M1 and M3 is related to the previous decision of the ECB to cut the cash rate by 0.25 may continue to do so in the coming months;
GB Current Account: This report will show of any shifts in the gap between the impost and exports as of the previous quarter. Based on the latest report, the deficit expanded to 14 billion pounds;
Final GB estimate of GDP for 1Q 2013: This will be the final estimate of GB’s first quarter 2013 real GDP growth. Based on the recent estimate, in the first quarter of 2013, the GDP contracted by 0.3%. If the GDP growth rate will change, it could affect the British Pound;
Italian 10 Year Bond Auction: the Italian government will come up with another bond auction; in the previous bond auction, which was held at the end of May, the average rate rose to 4.14%;
EU Economic Summit: In this summit, the EU ministers of finance will focus on unemployment including youth unemployment in EU. Considering Germany’s elections in September, the big decisions are likely to be made at the end of the year;
U.S Personal spending: this monthly update will refer to the changes in income and outlays in the U.S during May; in the last report regarding April the personal income fell by 0.2%;
U.S. Jobless Claims Weekly Report: in the latest report the jobless claims rose by 18k to reach 354k; this upcoming weekly report may affect the U.S dollar and consequently commodities and stocks;
U.S. Pending Home Sales: This report presents the shifts in pending home sales in the U.S. for May; in the latest report, the pending home sales index rose by 0.3% (M-over-M). These data are another indicator for the changes in U.S’s housing market;
Currencies / Bullion Market – June Update
The Euro/ USD fell again on Wednesday by 0.50% to 1.3012. During the month, the Euro/USD increased by 0.10%. Conversely, other currencies such as the Aussie dollar moderately appreciated yesterday against the U.S dollar by 0.18%. The correlations among gold, Euro and Aussie dollar weakened, e.g. the correlation between the Euro/USD and gold price is 0.53. If these correlations will continue to weakened, the developments of the Aussie, Euro and Canadian dollar are likely to have a lesser effect on bullion prices.
Current Gold and Silver Rates as of June 27th
Gold (short term delivery) is traded at $1,238.50 per t oz. a $8.70 or 0.71% increase as of 09:25*.
Silver (short term delivery) is at $18.75 per t oz – a 0.74% increase as of 09:25*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:00 – Euro Area Monetary Development
09:30 – GB Current Account
09:30 – Final GB estimate of GDP for 1Q 2013
Tentative – Italian 10 Year Bond Auction
All Day (two days Summit) – EU Economic Summit
13:30 – U.S Personal spending
13:30 – U.S. Jobless Claims Weekly Report
15:00 – U.S. Pending Home Sales
02:30 – Australia Private Sector Credit
07:00 – German Retail Sales
08:00 – KOF Economic Barometer
13:30 – Canada’s GDP by Industry
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