Precious metals prices changed direction and following their sharp tumble on Friday, they bounced back on Monday. Will their rally persist? The recent rally of precious metals came in a slow business day as volume of trade wasn’t high. The rally of leading risk related currencies such as Aussie dollar and Euro against the USD coincided with the latest recovery of precious metals prices. In other news, China’s demand for precious metals might start to pick up mainly in gold, which could keep gold price from further plummeting. On today’s agenda: China’s CPI, Great Britain Manufacturing Production, and ECOFIN Summit.
Here is a short outlook for precious metals for Tuesday, July 9th:
Gold and Silver Prices Overview – July Update
On Monday, gold bounced back and increased by 1.83% to $1,234.9; Silver also rallied by 1.6% to $19.03. During the month, gold rose by 0.91%; silver slipped by 2.17%.
In the chart below are the normalized rate of gold and silver for 2013 (normalized to 100 as of June 18th). The prices of gold and silver haven’t performed well in the past several weeks despite their recent recovery.
The ratio between the two precious metals slightly increased on Monday to 64.90. During July, the ratio rose by 0.43% as gold slightly out-performed silver.
See here the weekly outlook of gold and silver for July 8-12.
The gold and silver futures volumes of trade have rose on Friday to 255 thousand and 60 thousand, respectively. These numbers are higher than the volume traded during the previous week. On the other hand, the week started with lower volumes of trade. If the volume will pick up today, this could pull up the volatility of silver and gold rates. The chart below presents the volume of trading gold and silver futures in the CME in the past several weeks.
On Today’s Agenda
China‘s CPI: In May the Chinese inflation rate declined to an annual rate of 2.1%, which is lower than China’s target inflation. The low inflation is another indication for China’s economic slowdown. If the inflation will continue to slide, it could indicate that China’s economic progress is further cooling;
Great Britain Manufacturing Production: This update will present the annual rate of GB’s manufacturing production in May; in the previous report regarding April 2013 the index changed direction and slipped by 0.2%;
ECOFIN Summit: In this summit, the EU ministers of finance will focus on the economic developments in EU;
Currencies / Bullion Market – July Update
The Euro/ USD currency pair slightly increased on Monday by 0.32% to 1.2870. During July, the Euro/USD declined by 1.08%. Furthermore, other currencies such as the Aussie dollar also slightly appreciated yesterday against the U.S dollar by 0.74%. The correlations among gold, Euro and Aussie dollar strengthened, e.g. the relation between the AUD/USD and gold price is 0.32 in the past several weeks. If these correlations will further strengthen, the currencies pairs Aussie/USD, Euro/USD and Canadian dollar/USD are likely to affect previous metals prices.
Current Gold and Silver Rates as of July 9th
Gold (short term delivery) is traded at $1,254.50 per t oz. a $19.60 or 1.59% increase as of 08:42*.
Silver (short term delivery) is at $19.33 per t oz – a 1.53% increase as of 08:42*.
(* GMT)
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
Today
Tentative – China’s CPI
09:30 – Great Britain Manufacturing Production
All Day – ECOFIN Summit
Tomorrow
00:50 – Japan’s monetary policy meeting minutes
Tentative –China’s Trade Balance
08:45 – French Industrial Production
Tentative – OPEC Monthly Report
Tentative – U.S 10 Year Bond Auction
121:10 – Bernanke’s Speech
19:00 – Minutes of the last FOMC Meeting
21:10 – Bernanke’s Speech
For further reading: