The prices of precious metals slightly rose again for the second straight day. The volatility might pick up as the week will progress as the main events and reports of the week will come into fruition by then. The main events include the ECB rate decision and U.S non-farm payroll report. Will gold and silver continue to rally today? Currently, gold is slipping. In the U.S non-manufacturing PMI rose again to 56 in February. This means the non-manufacturing sectors are rising at a faster pace than in January. On today’s agenda: Governor King speaks, ADP estimate of U.S. non-farm payroll, Bank of Canada’s Overnight Rate, U.S Factory Orders, Australian Trade Balance and Bank of Japan Monetary Policy Statement.
Here is a short outlook for precious metals for Wednesday, March 6th:
Precious Metals – March Update
On Tuesday, the price of gold edged up again by 0.16% to $1,574.9; Silver also rose by 0.37% to $28.58. During the month, gold slipped by 0.18%; silver rose by 0.64%.
In the chart below are the normalized rates of gold and silver during February-March (normalized to 100 as of January 31st). The prices of gold and silver didn’t have a clear trend in recent days.
The Euro/ USD rose again on Tuesday by 0.2% to 1.30552. During the month, the Euro/USD fell by 0.12%. The Japanese yen also increased by 0.2% against the USD. Conversely, The Aussie dollar also appreciated yesterday against the USD by 0.61%. This low volatility in the forex market and modest gains was also the case for the precious metals prices. The correlations among gold, Japanese yen and Aussie dollar remained weak in recent weeks: during February/March, the linear correlation between gold and AUD/USD declined to 0.16 (daily percent changes); the linear correlation between the gold and USD/Yen declined to -0.32 (daily percent changes). These mid-weak correlations might imply the recent changes in gold and silver rates had less to do with the daily changes in the foreign exchange markets. Nonetheless, if major currencies will further strengthen against the USD, they might pull up gold and silver. The table below shows the correlations between precious metals and major currencies pairs.
Gold (short term delivery) is traded at $1,574 per t oz. an $0.1 or 0.01% decrease as of 23:19*.
Silver (short term delivery) is at $28.68 per t oz – a $0.07 or 0.25% increase as of 23:19*.
On Today’s Agenda
Bank of Canada’s Overnight Rate: The Bank of Canada will announce its decision on the Canadian overnight rate, which remained unchanged in the past two and half years at 1%. The last time the BOC reduced the rate was back in September 2010. The current expectations are that the BOC will keep the rate unchanged. This news may affect the direction of the Canadian dollar;
Bank of Japan – Monetary Policy Meeting: The news of the nomination of BOJ governor may have contributed to the movement of the Yen. In the recent meeting, BOJ left the interest rate flat at 0 to 0.1 percent and didn’t change its asset purchase plan. If BOJ will further expand its monetary policy, this could weaken the Japanese yen;
Governor King speaks: Bank of England’s Governor will testify about banking standards of England before Parliamentary Committee; he may also offer some insight regarding the upcoming MPC monetary policy meeting; this speech may influence British Pound traders;
ADP estimate of U.S. non-farm payroll: ADP will come out with its estimate for the upcoming U.S non-farm payroll change for February 2013 in anticipation for the upcoming no-farm report to be published by Tuesday;
U.S Factory Orders: This report will show the developments in U.S. factory orders of manufactured durable goods during last month; in the previous report factory orders rose by 1.8%; this report will offer some insight to the developments of the U.S economy and could affect the U.S dollar;
Australian Trade Balance: The report will pertain to January 2013. In the recent update, regarding December, the seasonally adjusted balance of goods and services contracted its deficit to $427 million. The export of non-monetary gold fell by $274 million; if the gold exports will continue to decline in January, it might suggest a drop in demand for non-monetary gold (see here last report);
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
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
08:00 – Swiss National Bank Foreign Currency Reserve
Tentative – Spanish 10 Year Bond Auction
Tentative – French 10 Year Bond Auction
09:00 – SNB Chairman Jordan’s Speech
12:00 –BOE Rate Decision
12:45 – ECB Rate Decision
13:30 –American Trade Balance
13:30 – Canadian Trade Balance
13:30 – U.S. Jobless Claims
00:50 – Japan’s GDP Fourth Quarter 2012
00:50 – Japan Current Account
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