The prices gold and silver slipped yesterday along with many other currencies pairs such as the Euro/USD and AUD/USD. It seems that the markets are still waiting for the big news items that will come later this week including the German Court ruling on bailout funding and the statement of the FOMC meeting. In the meantime China’s trade report showed some signs of slowdown as imports declined, as of August, by 2.6% and exports grew by only 2.6%, while the expectations were 3% growth. This new may have contributed to the decline in commodities prices yesterday. China’s new loans report will come out later on today. Currently the price of gold is rising. On today’s agenda: Canadian Trade Balance and American Trade Balance.
Here is a short outlook for precious metals for Tuesday, September 11th:
Precious Metals –September Update
On Monday, Gold declined by 0.5% to $1,731.8; Silver also slipped by 0.17% to $33.63. During September, gold increased by 2.6%; silver, by 6.97%.
As seen below, the chart presents the changes of normalized prices of precious metals in the past several weeks (normalized to 100 as of August 15th). During the month, gold and silver have rallied.
The ratio between the two precious metals slipped on Monday to 51.49. During September the ratio declined by 4.07% as gold slightly under-performed silver.
On Today’s Agenda
American Trade Balance: This report for July 2012 will show the developments in imports and exports of goods and services to and from the U.S, including commodities rates; according to the previous American trade balance report regarding June 2012 the goods and services deficit declined during the month to $42.9 billion;
Canadian Trade Balance: In the last report for June 2012, exports edged up by 0.2% while imports increased by 2.3%; as a result, the trade deficit expanded from a $954 million deficit in May to $1.8 billion deficit in June; this report may affect the Canadian dollar which tends to be strongly correlated with precious metals;
Currencies / Bullion Market – September Update
The Euro/ USD also declined on Monday by 0.5% to 1.2759. During the month, the Euro/USD rose by 1.4%. Further, other currencies including Aussie dollar also depreciated on Monday against the USD by 0.5%. The linear correlation between precious metals and Euro is still strong and positive: during August/September, the linear correlation between the gold and EURO/USD was 0.614 (daily percent changes). If the Euro will recover from yesterday’s decline it could also pull up the prices of precious metals.
Current Gold and Silver Rates as of September 11th
Gold (October 2012 delivery) is traded at $1,733.6 per t oz. a $1.8 or 0.1% increase as of 07:46*.
Silver (October 2012 delivery) is at $33.595 per t oz – a $0.038 or 0.11% decrease as of 07:46*.
Daily Outlook for September 11th
The prices of bullion slipped yesterday along with other major currencies pairs such as Euro/USD. I suspect there will be low volatility during the day as forex and commodities traders are waiting for the big news items of the week: German court ruling (on Wednesday), statement and press conference following the FOMC meeting on Thursday. There are still high expectations of another QE program – following the minutes of the previous FOMC meeting. My guess is that the FOMC won’t announce just yet of QE3 even though the market already expects that. I have pointed out the correlation between the speculations between QE3 news and the price of gold. Today’s publication of the Canada and America’s trade balance reports might have some effect on the Canadian dollar and USD, respectively. If these reports will show little progress it could pull down precious metals prices.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
13:30 –Canadian Trade Balance
13:30 –American Trade Balance
Tentative –OPEC Monthly Report
10:00– Euro Area Industrial Production
Tentative – German High Court Ruling on EMS
18:00 – U.S 10 Year Bond Auction
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