The equity markets tumbled down for the second consecutive day. The fall in stock markets may have contributed to rally of precious metals prices. Their rally came despite the sharp depreciation of “risk related currencies” such as the Aussie dollar. The lower than expected growth rate in Australia’s GDP in the first quarter of 2013 may have contributed to the fall of the Aussie dollar. In the U.S, the ADP estimates 135k jobs were added in May. These figures are lower than expected and may have pulled down the equity markets. What is next for precious metals? On today’s agenda: ECB Rate Decision (update: ECB left its interest rate unchanged; the Euro is rising), U.S. Jobless Claims (update: jobless claims declined by 11k to reach 346k), Spanish 10 Year Bond Auction, and German Industrial Production, BOE Rate Decision.
Here is a short outlook for precious metals for Thursday, June 6th:
Precious Metals – May Update
On Wednesday, gold slightly rose by 0.09% to $1,398.4; Silver also edged up by 0.28% to $22.47. During June, gold slightly rose by 0.42%; silver, by 1.1%.
In the chart below are the normalized rates of gold and silver for the past couple of weeks (normalized to 100 as of May 16th). The rates of gold and silver moved in an unclear trend in recent weeks.
The ratio between the two precious metals slipped on Wednesday to 62.23. During June, the ratio declined by 0.67% as gold slightly under-performed silver.
On Today’s Agenda
BOE Rate Decision: Bank of England will announce its basic rate for June 2013; the MPC will also state of any new changes to its asset purchase pogrom; as of May, BOE kept the rate unchanged at 0.5% and the asset purchase plan s at £375 billion;
ECB Rate Decision: ECB will decide its cash rate for June. Following the last meeting in which the ECB cut its rate by 0.25pp to 0.50% rate, all eyes will be on Draghi’s next move;
U.S. Jobless Claims Weekly Report: in the previous report the jobless claims increased by 10k to reach 354k; this forthcoming weekly report may affect the U.S dollar and consequently commodities and stocks markets;
Spanish 10 Year Bond Auction: Spain will issue its monthly with bond auction; in the last bond auction, which was held at the middle of April, the average rate reached 4.61% – the highest rate for that month;
German Industrial Production: This report will refer to the changes in the industrial production of the German for May; in the latest report the German industrial production rose by 1.2% (M-O-M) during April;
Currencies / Bullion Market – May Update
The Euro/ USD slightly rose on Wednesday by 0.09% to 1.3093. During June, the Euro/USD increased by 0.72%. Conversely, other currencies such as the Aussie dollar depreciated yesterday against the U.S dollar by 1.12%. The correlations among precious metals and leading currencies have strengthened: during May and June the linear correlation between gold and USD/CAD reached -0.60 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.56 (daily percent changes). If these correlations will continue to strengthen, the direction of the Aussie, Canadian dollar and Euro are likely to affect precious metals. The chart below shows the linear correlation among currencies and precious metals rates.
Current Gold and Silver Rates as of June 6th
Gold (short term delivery) is traded at $1,401.50 per t oz. a $3 or 0.21% increase as of 00:28*.
Silver (short term delivery) is at $22.47 per t oz – a 0.01% decrease as of 00:28*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
Tentative – Spanish 10 Year Bond Auction
11:00– German Industrial Production
12:00 –BOE Rate Decision & Asset Purchase Plan
12:45 – ECB Rate Decision
13:30 – U.S. Jobless Claims
13:30 – Canada’s Employment Report
13:30 – U.S. Non-Farm Payroll Report
Tentative –China’s Trade Balance
Tentative – China’s CPI
For further reading: