The rates of precious metals rallied yesterday after their moderate decline a day earlier. This unclear trend may have been stem from the FOMC’s decision to keep policy and outlook unchanged on the one hand and the recent developments in Europe including the whole Cyprus bailout plan. In the U.S several reports came out in the past couple of days that showed a mixed signal in regards to the progress of the U.S economy: the Philly fed survey rallied in March; the housing starts and building permits increased in February; the U.S jobless claims slightly rose by 2k to reach 336k. Will the volatility of precious metals prices rise today? On today’s agenda: German Business Climate Survey.
Here is a short outlook for precious metals for Friday, March 22nd:
Precious Metals – March Update
On Thursday, the price of gold rose by 0.39% to $1,613.8; Silver also increased by 1.37% to $29.19. During March, gold rose by 2.29%; silver, by 2.78%. during March (normalized to 100 as of February 28th).
The gold and silver futures volumes of trade have declined on Thursday to 166 thousand and 28 thousand, respectively. These numbers are lower than the volume traded a day earlier but roughly the same as the same day last week. If the volume will remain low today, this could suggest the odds of sudden shift in the rates of gold and silver due to low volume will decline. The chart below presents the volume of trading gold and silver futures in the CME in recent weeks.
The linear correlation between the gold and major currencies pairs remained weak. Moreover, the developments in Europe vis-à-vis Cyprus bailout pulled down the Euro and many other currencies in the process but these events led to a rise in demand for safe haven investments such as gold and silver. Thus, the developments in the forex markets had little impact on gold and silver. The linear correlation between silver and AUD/USD was only 0.21 (daily percent changes); the relation between gold and USD/JPY reached -0.29. Based on the above, if the Euro and other risk related currencies will continue to depreciate against the USD, as they did during the week, the prices of gold and silver aren’t likely to be affected by these turn of events.
On Today’s Agenda
German Business Climate Survey: In the recent report for February 2013, the business climate index rose from 104.2 in January to 107.4 in February; if this trend will continue, it might pressure up the Euro.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
09:00 – German Business Climate Survey
For further reading:
- Gold and Silver Outlook for March 18-22
- Weekly Outlook of Financial Markets for March 18-22
- Gold and Silver Outlook for March
- Why Gold Isn’t Pulling Up?
- What Could Impede This Gold Company?