Precious metals market heated up on Monday after gold and silver prices haven’t done much during last week. The recent positive news of the growth in China’s manufacturing PMI while the U.S manufacturing has tumbled down may have helped pull up the prices of gold and silver. In the forex markets, the leading “risk related currencies” such as the Canadian dollar and Aussie dollar also sharply appreciated against the USD. Will precious metals change direction and fall today? On today’s agenda: Reserve Bank of Australia Cash Rate Statement, Spain’s unemployment Change, American and Canadian trade balance reports, and Australian GDP First Quarter 2012 .
Here is a short outlook for precious metals for Tuesday, June 4th:
Precious Metals – May Update
On Monday, gold sharply rose by 1.38% to $1,411.8; Silver also spiked by 2.22% to $22.72. During last month, gold declined by 5.41%; silver, by 7.94%.
In the chart below are the normalized rates of gold and silver for 2013 (normalized to 100 as of April 15th). The prices of gold and silver slightly rose during recent days.
The ratio between the two precious metals slightly declined on Monday to 62.14. During the month, the ratio slipped by 0.82% as gold slightly under-performed silver.
The gold and silver futures volumes of trade have slightly declined on Friday to 181 thousand and 52 thousand, respectively. These numbers are slightly lower than the volume earlier last week. If the volume will rise, this could suggest the volatility of prices of gold and silver due to high volume will increase. The chart below presents the volume of trading gold and silver futures in the CME during May.
On Today’s Agenda
Reserve Bank of Australia – Cash Rate Statement: Following the latest decision of RBA to reduce its cash rate by 0.25 pp to 2.75% – its lowest level – this decision dragged down the Aussie dollar and commodities prices along with it. If the RBA will decide to surprise and reduce its rate again, this news may pull further down the Australian dollar, which tends to be strongly linked with commodities;
Spain‘s unemployment Change: the number of people unemployed in Spain fell in April by 46.1k. This mean, the employment situation in Spain has slightly improved. If in the upcoming report the number of unemployed will rise, this may pull down the Euro;
American Trade Balance: This monthly report for April will show the developments in imports and exports of goods and services to and from the U.S; according to the recent American trade balance report regarding March the goods and services deficit declined during the month to $38.8 billion;
Canadian Trade Balance: In the previous report regarding March 2013, exports sharply rose by 5.1% and imports increased by 1.7%; as a result, the trade balance shifted from a $1.2 billion deficit in February to $24 million surplus in March; this report may affect the Canadian dollar which tends to be correlated with prices of commodities;
Australian GDP First Quarter 2012: This quarterly report will refer to the Australia’s GDP growth rate for the first quarter of 2013. In the fourth quarter of 2012, the GDP expanded by 0.6% (seasonally adjusted). The slowdown in China’s economy might have also adversely affected the progress of Australia’s economy. If the GDP growth rate will slip, it could affect the path of Australia dollar (see here last report);
Currencies / Bullion Market – May Update
The Euro/ USD increased on Friday by 0.59% to 1.3076. During last month, the Euro/USD decreased by 1.28%. Moreover, other currencies such as the Aussie dollar and Canadian dollar sharply appreciated yesterday against the U.S dollar by 2.09% and 0.94%, respectively. The correlations among gold, Canadian dollar and Aussie dollar strengthened: during recent weeks the linear correlation between gold and USD/CAD reached -0.49 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.57 (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.
Current Gold and Silver Rates as of June 4th
Gold (short term delivery) is traded at $1,410.60 per t oz. a $1.3 or 0.09% decrease as of 03:07*.
Silver (short term delivery) is at $22.62 per t oz – a 0.44% decrease as of 03:07*.
(* GMT)
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
Today
05:30 – Reserve Bank of Australia – Cash Rate Statement
08:00 – Spain’s unemployment Change
13:30 –American Trade Balance
13:30 – Canadian Trade Balance
02:30 – Australian GDP First Quarter 2012
Tomorrow
13:15 – ADP estimate of U.S. non-farm payroll
15:00 – U.S. ISM Non-Manufacturing PMI
15:00 – U.S Factory Orders
02:30 – Australian Trade Balance
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