The rates of silver and gold remained virtually unchanged on the first of day of the week. In Australia, RBA left its policy unchanged and didn’t cut its cash rate. Governor Stevens was upbeat about the rise in capital expenditures. This news and positive sentiment may help rally the Aussie dollar, which tends to be correlated with bullion rates. Nonetheless, RBA might eventually decide to cut its cash rate in the near future. The next rate decision will be of Bank of Canada that will be announced tomorrow. In Asia, CME Asia is expanding its business mainly on the rise in commodities including gold and currencies. As the Asian financial markets continue to grow the effect of Asia on the direction of commodities will continue to rise. Will gold and silver bounce back today? Currently, gold and silver are rising. On today’s agenda: BOC rate decision, ECONFIN Meeting, U.S. ISM Non-Manufacturing PMI, Australian GDP Fourth Quarter 2012, and GB Services PMI.
Here is a short outlook for precious metals for Tuesday, March 5th:
Precious Metals – March Update
On Monday, the price of gold inched up by 0.03% to $1,572.4; Silver also edged up by 0.08% to $28.47. During the month, gold slipped by 0.34%; silver rose by 0.27%.
In the chart below are the normalized prices of gold and silver between February and March (normalized to 100 as of January 31st). The prices of gold and silver didn’t do much in the past couple of weeks.
The gold and silver futures volumes of trade have declined on Monday to 140 thousand and 31 thousand, respectively. These numbers are lower than the volume traded in recent weeks. If the volume will remain low today, this could suggest the odds of sudden changes in the prices of gold and silver due to low volume will fall. The chart below presents the volume of trading gold and silver futures in the CME during February and early March.
The Euro/ USD inched up on Monday by 0.03% to 1.3026. During the month, the Euro/USD fell by 0.32%. The Japanese yen also edged up by 0.1% against the USD. Conversely, some currencies such as the Aussie dollar depreciated yesterday against the USD by 0.06%. This low volatility along with mixed trend may have partly contributed to the little movement and mixed trend in the bullion market. The correlations among gold, Japanese yen and Canadian dollar have weakened in recent weeks: during February/March, the linear correlation between gold and USD/CAD declined to -0.14 (daily percent changes); the linear correlation between the gold and USD/Yen declined to -0.29 (daily percent changes). These mid-weak correlations might imply the recent movement in gold and silver rates had less to do with the daily shifts in the foreign exchange markets. Nonetheless, if major currencies will strengthen against the USD, they might positively affect gold and silver.
Current Gold and Silver Rates as of March 5th
Gold (short term delivery) is traded at $1,580 per t oz. an $8 or 0.48% increase as of 06:21*.
Silver (short term delivery) is at $28.77 per t oz – a $0.27 or 0.93% increase as of 06:21*.
On Today’s Agenda
ECONFIN Meetings: EU ministers of finance and EU leading policymakers will convene for the monthly meeting;
GB Services PMI: This report will refer to the changes in the services sector during February 2013. As of January 2013this index increased to 51.5% – this means the services sector is growing; this index may affect forex and commodities trading;
U.S. ISM Non-Manufacturing PMI: For the previous update, this index declined to 55.2% – this means the non-manufacturing is growing and at a slower pace than in the previous month; this index may affect the USD;
Australian GDP Fourth Quarter 2012: In Q3 2012, the GDP expanded by 0.5% (seasonally adjusted) – a slightly lower growth rate than in the first couple of quarters. The slowdown in China’s economy might have also adversely affected the growth of Australia’s GDP. Australia is among the leading countries in exporting commodities; if the GDP growth rate will fall again, it could affect the direction of Australia dollar;
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
All Day – ECONFIN Meetings
09:30 – GB Services PMI
15:00 – U.S. ISM Non-Manufacturing PMI
02:30 – Australian GDP Fourth Quarter 2012
09:45 –Governor King speaks
13:15 – ADP estimate of U.S. non-farm payroll
14:00 – Bank of Canada’s Overnight Rate
15:00 – U.S Factory Orders
02:30 – Australian Trade Balance
Tentative – Bank of Japan – Rate Decision and Monetary Policy Statement
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