The prices of silver and gold changed direction and fell on Thursday. The recent comments made by ECB President Draghi regarding the strength of the Euro raised the speculations that the ECB might cut its cash rate in the near future. U.S jobless claims decreased by 5k and reached 366k. This news may have also contributed to the strengthening of the USD. Currently gold and silver prices are rising. On today’s agenda: China New Loans, Canada’s Employment Report, American Trade Balance, China’s CPI and Canadian Trade Balance.
Here is a short outlook for precious metals for Friday, February 8th:
Precious Metals – February Update
On Thursday, the price of gold fell by 0.45% to $1,670.6; Silver price also declined by $31.4. During the month, gold increased by 0.6%; silver, by 0.22%.
As seen below, the chart presents the shifts in the normalized prices of precious metals in recent weeks (normalized to 100 as of December 31st). During the month, the rate of silver and gold moved in an unclear trend.
The ratio between the two precious metals rallied on Thursday to 53.2. During the month, the ratio rose by 0.38% as gold slightly out-performed silver.
On Today’s Agenda
China’s CPI: during December the Chinese inflation rate rose to an annual rate of 2.5%; this rate is well below China’s inflation target of 4% in annual terms. If the inflation will continue remain low, it could indicate that China’s economic progress isn’t expanding; China is among the leading countries in importing gold and oil;
Canada’s Employment Report: In the recent employment update for December, unemployment edged down to 7.1%; the employment rose by 40k during the month. The upcoming report might affect the Canadian dollar;
Canadian Trade Balance: In the previous report regarding November, exports fell by 0.9% and imports rose by 2.7%; as a result, the trade deficit expanded from a $552 million deficit in October to $2 billion deficit in November;
American Trade Balance: This report for December will show the recent developments in imports and exports of goods and services to and from the U.S, including commodities such as oil and natural gas; according to the previous American trade balance report regarding November the goods and services deficit increased during the month to $48.7 billion;
China New Loans: This report will pertain to the recent developments in China’s new loans given during the previous month. According to the recent report, the total loans changed direction and fell;
Currencies / Bullion Market – February Update
The Euro/ USD tumbled down on Thursday by 0.93% to 1.3398. During the month, the Euro/USD fell by 1.33%. The Aussie dollar also depreciated against the USD by 0.37%. The downward trend in the forex markets in which the Euro and Aussie dollar fell may have affected precious metals rates. The correlations among gold, Canadian dollar and Aussie dollar were mid-strong in recent weeks: during January/February, the linear correlation between gold and USD/CAD reached -0.33 (daily percent changes); the linear correlation between the gold and AUD /USD reached 0.43 (daily percent changes). From these correlations we might infer the recent changes of gold and silver were partly affected or resulted from the changes in the foreign exchange markets. If the Euro and other risk currencies will change direction and rally against the USD, they might pressure up bullion rates.
Current Gold and Silver Rates as of February 8th
Gold (short term delivery) is traded at $1,672.5 per t oz. a $1.2 or 0.07% increase as of 03:47*.
Silver (short term delivery) is at $31.5 per t oz – a $0.09 or 0.29% increase as of 03:47*.
(* GMT)
Daily Outlook for February 8th
Prices of gold and silver changed direction and fell yesterday but remained little changed form the beginning of the month. The recent tumble if the Euro seems to have dragged down not only other risk related currencies but also precious metals. The upcoming reports regarding China’s economy including CPI and new loans may influence commodities traders. If China’s economy will show signs of progress, this could help pressure up bullion rates. On the other hand, if America’s trade balance will present the U.S economy is growing, then the USD may rally and thus pull down bullion rates.
Finally if the Euro and other related currencies will changed course and rise, they could pull up precious metals rates.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
Today
05:30 – China’s CPI
13:30 – Canada’s Employment Report
13:30 – Canadian Trade Balance
13:30 –American Trade Balance
Tentative – China New Loans
For further reading:
- Gold and Silver Outlook for February 4-8
- Weekly Outlook Financial Markets for February 4-8
- Gold and Silver Outlook for February
- Gold and Silver Yearly Outlook For 2013