Bullion market slightly heated up last week as gold and silver prices rallied during last week. The recent cool down in stock markets in the U.S may have contributed to the recovery of precious metals. In the forex markets, the leading “risk related currencies” such as the Canadian dollar and Aussie dollar also depreciated against the USD during last week. Will precious metals change direction and decrease this week? On today’s agenda: U.S Consumer Confidence and Bank of Japan’s Kuroda Speaks.
Here is a short outlook for precious metals for Tuesday, May 28th:
Precious Metals – May Update
On Friday, gold slipped by 0.37% to $1,386.6; Silver edged down by 0.07% to $22.48. During the May, gold declined by 5.81%; silver, by 6.89%.
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 fell on Friday to 61.68. During the month, the ratio rose by 1.16% as gold slightly out-performed silver.
The gold and silver futures volumes of trade have sharply declined on Friday to 179 thousand and 32 thousand, respectively. These numbers are much lower than the volume a few days earlier. If the volume will continue to fall, this could suggest the volatility of prices of gold and silver due to low volume will decline. The chart below shows the volume of trading gold and silver futures in the CME during the past several weeks.
On Today’s Agenda
U.S Consumer Confidence: according to the recent monthly update, the consumer confidence index rose in March to 68.1 (M-o-M). The current expectations are that the March index may continue to rise; this report might affect precious metals rates;
Bank of Japan’s Kuroda Speaks: Bank of Japan Governor will give a speech at the Bank’s Institute for Monetary and Economic Studies 2013 International Conference. The title of his speech is “The Financial Crisis and the International Financial System“;
Currencies / Bullion Market – May Update
The Euro/ USD inched down on Friday by 0.02% to 1.2932. During May, the Euro/USD decreased by 1.79%. Moreover, other currencies such as the Aussie dollar and Canadian dollar also depreciated yesterday against the U.S dollar by 1.01% and 0.13%, respectively. The correlations among gold, Canadian dollar and Aussie dollar weakened: during recent weeks the linear correlation between gold and USD/CAD reached -0.33 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.53 (daily percent changes). If these correlations will hold up, the direction of the Aussie, Canadian dollar and Euro are likely to partly affect precious metals rates.
Current Gold and Silver Rates as of May 28th
Gold (short term delivery) is traded at $1,389.83 per t oz. a $1.8 or 0.13% increase as of 05:30*.
Silver (short term delivery) is at $22.44 per t oz – a 0.27% decrease as of 05:30*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
15:00 – U.S Consumer Confidence
01:00 – Bank of Japan’s Kuroda Speaks
09:00 – Euro Area Monetary Development
15:00 – Bank of Canada’s Overnight Rate
Tentative – Spanish 10 Year Bond Auction
02:30 – Australia’s Building Approvals
02:30 – Australia Private New Capital Expenditure
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