Gold and silver prices continued to rise for the second consecutive business day after precious metals had plummeted in the past couple of weeks. Their rally was despite the news of the U.S manufacturing PMI report for June, in which the PMI bounced back to 50.9%. UK manufacturing PMI also grew during last month to 52.5. Conversely, China’s manufacturing PMI slipped to 50.1, which means China’s manufacturing sectors are still growing but at slower pace. If the U.S economy will keep showing signs of progress, this could raise the odds of the Fed tapering QE3 by the year’s end. This, in turn, is likely to pull back gold and silver prices. Will gold and silver prices continue to trade up? On today’s agenda: Reserve Bank of Australia rate decision and U.S factory orders.
Here is a short outlook for precious metals for Tuesday, July 2nd:
Precious Metals – July Update
On Monday, gold sharply rose by 2.61% to $1,255.7; Silver also increased by 0.6% to $19.57. During last month, gold declined by 12.12%; silver, by 12.49%.
In the chart below are the normalized prices of gold and silver for 2013 (normalized to 100 as of May 31st). The prices of gold and silver bounced back in the past couple of business days.
The ratio between the two precious metals rose on Monday to 64.17. During last month, the ratio rose by 0.43% as gold slightly out-performed silver.
The gold and silver futures volumes of trade have slightly increased on Friday to 336 thousand and 90 thousand, respectively. These numbers are higher than the volume traded during last week. If the volume will remain high today, this could raise the volatility of the prices of gold and silver. The chart below shows the volume of trading gold and silver futures in the CME during last month.
On Today’s Agenda
Reserve Bank of Australia – Cash Rate Statement: Following the recent rate decision of RBA to leave the cash rate at 2.75% – its lowest level –the Aussie dollar continued to trade down. Will the RBA cut again its rate this month? If the RBA will decide to reduce its rate again, this news may further drag down the Australian dollar, which tends to be strongly correlated with gold prices;
U.S Factory Orders: This report will present the developments in U.S. factory orders of manufactured durable goods during June; in the previous report factory orders declined by 1%; this report will offer some insight regarding the growth of the U.S economy;
Currencies / Bullion Market – July Update
The Euro/ USD currency pair also rose on Monday by 0.42% to 1.3064. During last month, the Euro/USD inched up by 0.08%. Moreover, other currencies such as the Aussie dollar also appreciated yesterday against the U.S dollar by 1.09%. The correlations among gold, Euro and Aussie dollar strengthened, e.g. the correlation between the Euro/USD and gold price is 0.50 during June-July. If these correlations will continue to strengthen, the direction of the Aussie, Euro and Canadian dollar against the USD are likely to have a affect bullion prices.
Current Gold and Silver Rates as of July 2nd
Gold (short term delivery) is traded at $1,256.30 per t oz. a $1.25 or 0.05% increase as of 02:35*.
Silver (short term delivery) is at $19.64 per t oz – a 0.29% increase as of 02:35*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
05:30 – Reserve Bank of Australia – Cash Rate Statement
15:00 – U.S Factory Orders
00:30 – Australian Retail Sales
02:30 – Australian Trade Balance
13:15 – ADP estimate of U.S. non-farm payroll
13:30 –American Trade Balance
13:30 – Canadian Trade Balance
13:30 – U.S. Jobless Claims Weekly Report
15:00 – U.S. ISM Non-Manufacturing PMI
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