Precious metals continue to zigzag as both gold and silver changed course again and fell during yesterday. Several U.S reports showed a mixed signal as to the progress of the U.S economy: the flash manufacturing PMI (opens pdf) for April declined to its lowest level in six months to reach 52 – this means the manufacturing sectors in the U.S are still growing but at a slower pace. Yesterday it was also reported that the number of new home sales rose by 1.5% to a rate of 411 thousand compared to March and by 18.5% compared to April 2012. This news may have pulled down precious metals rates. In Europe, the flash manufacturing PMI report also came out and showed the index remained below 50, which means the manufacturing sectors in the EU are contracting. Will gold and silver continue to zigzag and rally? Currently, precious metals are traded up. On today’s agenda: German Business Climate Survey, Italian 10 Year Bond Auction, U.S Core Durable Goods and BOC Gov Carney Speaks.
Here is a short outlook for precious metals for Wednesday, April 24th:
Precious Metals – April Update
On Tuesday, the price of gold fell by 0.87% to $1,408; Silver also decreased by 2.17% to $22.82. During the month, gold declined by 11.67%; silver, by 19.35% – currently the worst performing month for both metals in years.
In the chart below are the normalized rates of gold and silver for 2013 (normalized to 100 as of March 28th). The rates of gold and silver haven’t performed well during the month.
U.S Core Durable Goods: This report may indirectly indicate the developments in U.S. demand for commodities. As of February, new orders of manufactured durable goods increased to $232.10 billion; if the report will show growth it could pull up commodities and equities markets;
German Business Climate Survey: This survey estimates the changes (on a monthly basis) of the business climate of Germany as of April. In the recent report for March 2013, the business climate index fell from 107.4 in February to 106.7 in March; if this trend will continue, it might pressure down the Euro, which is linked with precious metals;
Italian 10 Year Bond Auction: the Italian government will issue its monthly with bond auction; in the recent bond auction, which was held at the last week of March, the average rate reached 2.66% – a drop in rate compare to the previous month;
BOC Gov Carney Speaks: Carney will give another speech this week, this time before the Standing Committee on Banking, Trade, and Commerce, in Ottawa;
Currencies / Bullion Market – April Update
The Euro/ USD also changed direction and fell on Tuesday by 0.54% to 1.2996. During April, the Euro/USD rose by 1.40%. Moreover, other currencies such as the Aussie dollar and Japanese yen also slightly depreciated yesterday against the U.S dollar by 0.16% and 0.24%, respectively. The depreciation of leading currencies against the U.S dollar may have slightly contributed to the drop of gold and silver. The correlations among gold, silver, Euro and Aussie dollar remained robust as indicated in the chart below: during April the linear correlation between gold and USD/CAD was -0.70 (daily percent changes); the linear correlation between the silver and Euro/USD was 0.54 (daily percent changes). If these correlations will persist, precious metals rates might be affected by the shifts in the foreign exchange markets.
Current Gold and Silver Rates as of April 24th
Gold (short term delivery) is traded at $1,423.1 per t oz. a $14.3 or 1.02% increase as of 04:22*.
Silver (short term delivery) is at $23.05 per t oz – a 0.78% increase as of 04:22*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:00 – German Business Climate Survey
Tentative – Italian 10 Year Bond Auction
13:30 – U.S Core Durable Goods
15:30 – U.S Crude Oil Stockpiles Weekly Update
21:15 – BOC Gov Carney Speaks
09:30 – Flash GB GDP Q4 2012
13:30 – U.S. Jobless Claims Weekly Report
15:30 – EIA U.S. Natural Gas Storage Update
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