Precious metals had a slow start this week as both gold and silver remained nearly unchanged. This slow movement may dissipate as the week will progress. Yesterday, several U.S reports came out and all showed growth: Consumer confidence for June was up; new home sales rose by 2.1% during May; new orders of manufacturing goods also increased by 3.6% during May. These positive reports may suggest the U.S economy is keep progressing, which will raise the odds of the Fed taper QE3 by the year’s end. This, in turn, is likely to drag down gold and silver prices. The current price of gold, which is well below the $1,300 is already starting to affect gold mines in South Africa: Some mines need at least $1,400 per ounce of gold to remain in business. Will gold and silver prices resume their downward trend? On today’s agenda: Gfk German Consumer Climate survey and last estimate of U.S GDP first quarter of 2013.
Here is a short outlook for precious metals for Wednesday, June 26th:
Precious Metals – June Update
On Tuesday, gold inched down by 0.15% to $1,274.9; Silver edged up by 0.17% to $19.53. During June, gold declined by 8.45%; silver, by 12.16%.
In the chart below are the normalized rates of bullion for 2013 (normalized to 100 as of May 31st). The rates of gold and silver sharply declined during the month.
The ratio between the two precious metals slipped on Tuesday to 65.29. During June, the ratio rose by 4.22% as gold out-performed silver.
On Today’s Agenda
Gfk German Consumer Climate Survey: This survey estimates Germany’s consumers’ changes in past and future economic conditions (on a monthly basis) as of June. In the recent report for May 2013, the climate index rose to 6.5;
Third Estimate of U.S GDP for 1Q 2013: In the first estimate the U.S GDP rose by 2.5% in the first quarter; in the fourth quarter the GDP grew by 0.4%. If there will be a sharp change in the growth rate from second to the third Q1 estimate, this could affect precious metals prices;
Currencies / Bullion Market – June Update
The Euro/ USD slipped again on Tuesday by 0.33% to 1.3077. During the month, the Euro/USD increased by 0.60%. Conversely, other currencies such as the Aussie dollar slightly appreciated yesterday against the U.S dollar by 0.12%. The correlations among gold, Euro and Aussie dollar strengthened, e.g. the correlation between the USD/CAD and gold price is -0.46. The chart below shows the correlations among precious metals and leading currencies pairs in June. If these correlations will continue to strengthen, the developments of the Aussie, Euro and Canadian dollar are likely to have a stronger effect on bullion prices.
Current Gold and Silver Rates as of June 26th
Gold (short term delivery) is traded at $1,252.30 per t oz. a $22.8 or 1.79% decrease as of 05:28*.
Silver (short term delivery) is at $18.95 per t oz – a 3.1% decrease as of 05:28*.
(* GMT)
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
Today
09:00 – Gfk German Consumer Climate Survey
13:30 – Third Estimate of U.S GDP for 1Q 2013
Tomorrow
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
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