The financial markets didn’t experience high volatility during yesterday. Gold and silver markets also remained relatively poised as all eyes will be towards the upcoming testimony of Bernanke in the House. This testimony could have a strong effect on precious metals market if the Chairman of the Fed will offer some additional insight regarding the future plans of the FOMC vis-à-vis its asset purchase program. Yesterday, the U.S CPI came out and showed a 0.5% rise in inflation during June mainly due to sharp rise in energy prices. Core CPI inched up by 0.2%. In other news, the minutes of the recent RBA meeting came out: The minutes weren’t dovish so that the expectations of another rate cut are low, which may have contributed to the sharp rise in the Aussie dollar. Will gold and silver change direction and decline today? On today’s agenda: Great Britain Claimant Count Change, MPC Asset Purchase and Rate Votes, U.S. Housing Starts and Building Permits, Bank of Canada’s Overnight Rate, Bernanke’s Testimony, and Bank of Canada’s Monetary Policy and Press Conference.
Here is a short outlook for precious metals for Wednesday, July 17th:
Gold and Silver Prices Review – July Update
On Tuesday, gold slightly rose again by 0.54% to $1,290.4; Silver also slightly increased by 0.48% to $19.93. During July, gold rose by 5.44%; silver, by 2.44%.
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 rallied in the past several days.
See here the weekly outlook of gold and silver for July 15-19.
On Today’s Agenda
Bernanke’s Testimony: Bernanke will testify in the U.S. House of Representatives before the Committee on Financial Services. The title of the speech is “Semiannual Monetary Policy Report to the Congress “. Following Bernanke’s remarks from last week and the minutes of the FOMC meeting, this testimony could offer some additional information regarding the future steps of the Fed. If this testimony will change the current market expectations regarding the timing as to when will the FOMC start tapering QE3, this could affect gold and silver;
Great Britain Claimant Count Change: This report will show the changes in the number of unemployed in GB; as of last month’s report this figure had declined by 8.6k; the rate of unemployment remained unchanged at 7.8%;
MPC Asset Purchase and Rate Votes: in the latest MPC meeting, the Bank kept the rate unchanged at 0.5% and the asset purchase program at £375 billion; this vote will shows how many MPC members voted on any changes to the asset purchase program or interest rate;
German 10 Year Bond Auction: the German government will have its monthly bond auction; in the previous bond auction, which was held at the middle of June, the average rate reached 1.55% – its highest level since January 2013;
U.S. Housing Starts: this report was historically correlated with gold– as housing starts rise, gold tended to fall the next day; in the previous monthly report, the adjusted annual rate reached 914,000 in May 2013 – a 6.8% drop from the previous month;
U.S. Building Permits: in the previous update, building permits fell during May by 3.1% as the adjusted annual rate of building permits reached 974,000 (the recent U.S building permits update);
Bank of Canada’s Overnight Rate: The Bank of Canada will decide the Canadian overnight rate, which remained unchanged at 1%. The BOC may keep its policy and maintain its interest rate at 1%; the economic developments in Canada might prompt BOC to change its cash rate;
Bank of Canada’s Monetary Policy and Press Conference: The Bank of Canada will publish its quarterly monetary policy update and will also have a press conference; if there will be big headlines in this press conference it could affect the Canadian dollar, which is strongly linked with gold and silver prices;
Currencies / Bullion Market – July Update
The Euro/ USD currency pair also rose on Tuesday by 0.77% to 1.3162. During July, the Euro/USD increased by 1.17%. Moreover, other currencies such as the Aussie dollar sharply appreciated yesterday against the U.S dollar by 1.70%. Nonetheless, the correlations among gold, Euro and Aussie dollar weakened, e.g. the correlation between the Euro/USD and gold price is 0.44 in the past several weeks. If these correlations will strengthen, the currencies pairs Aussie/USD, Euro/USD and Canadian dollar/USD are likely to affect precious metals prices.
Current Gold and Silver Rates as of July 17th
Gold (short term delivery) is traded at $1,285.60 per t oz. a $4.8 or 0.37% decrease as of 08:51*.
Silver (short term delivery) is at $19.79 per t oz – a 0.73% decrease as of 08:51*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:30 – Great Britain Claimant Count Change
09:30 –MPC Asset Purchase and Rate Votes
Tentative – German 10 Year Bond Auction
13:30 – U.S. Housing Starts
13:30 – U.S. Building Permits
15:00 – Bank of Canada’s Overnight Rate
15:00 – Bernanke’s Testimony
15:30 – Bank of Canada’s Monetary Policy and Press Conference
09:30 – GB Retails Sales
Tentative – Spanish 10 Year Bond Auction
13:30 – U.S. Jobless Claims
15:00 – Bernanke’s Testimony
15:00 – Philly Fed Manufacturing Index
For further reading:
- Gold and Silver Outlook for July
- Will Gold Recover from its Recent Fall?
- Gold and Silver Outlook for July 15-19
- Weekly Outlook of Financial Markets for July 15-19
- Euro/USD Weekly Overview for July 15-19
- Gold and Silver Yearly Outlook For 2013