Gold and silver prices tumbled down again along with other commodities. The Euro/USD reached yesterday its lowest level in nearly two years. The speculation around the future of Greece in the EU is likely to be among the factors dragging down not only the Euro but also precious metals. The U.S new home sales rose in April. The recent Summit of the European Leaders didn’t bring big headlines as German Chancellor Merkel still opposes a jointly issued EU bond.
On today’s agenda: U.S core durable goods, German Business Climate Survey (update: German confidence fell), ECB President Draghi Speaks, U.S. Jobless Claims, and GB revised GDP Q1 2012. Currently precious metals prices are rising. This rise might be just a market correction as other commodities and stock indexes are also trading up.
Here is a short outlook for gold and silver for Thursday, May 24th:
Precious Metals – May Update
Gold price tumbled down again on Wednesday by 1.79% to $1,548.4; silver also decreased by 2.34% to $27.52. During the month gold declined by 6.96% and silver by 11.27%.
The chart below presents the normalized rates of precious metals during month so far (both metals rates are normalized to 100 as of April 30th).
The ratio between the two metals rose on Wednesday to 56.27. During the month the ratio rose by 4.87% as silver has moderately under-performed gold during the month. In the chart below are the developments of this ratio during May.
According to the recent U.S new home sales report for April the number of homes sold increased by 3.3% to a seasonally adjusted annual rate of 343 thousand home sales; this is another positive report that shows some slow progress in the U.S housing market (the previous report on existing home sales was also positive).
This news might have been among the factors to pull down gold and silver prices.
On Today’s Agenda
U.S Core Durable Goods: This report may indirectly show the shifts in U.S. demand for commodities. According to previous report for March, new orders of manufactured durable goods decreased by $8.4 billion to $203 billion; if this report will continue to be negative then it could curb the recent appreciation of the US dollar and also affect gold oil and silver prices;
U.S. Jobless Claims Weekly Report: in the latest report the jobless claims remained unchanged at 370,000; this upcoming weekly report may affect the path of the U.S dollar and consequently commodities;
German Business Climate Survey: In the previous report for April 2012, the business climate index edged up from 109.8 in February to 109.9 in April; if this upward trend will change direction, it might further pull down the Euro;
ECB President Draghi Speaks: The President of ECB, Mario Draghi will talk at Bank of Italy in Rome. Given the recent political changes in Greece and tumble of the Euro, if Draghi will refer to the speculation around the Greek debt crisis and the stands of ECB on the current situation this could affect the forex and commodities markets;
Great Britain GDP Q1 2012(revised): according to the preliminary estimate the first quarter contracted by 0.2%(Q-2-Q); if there will be a sharp shift from the preliminary estimation it might affect the BP;
Currencies / Gold & Silver Market – May Update
The Euro/U.S Dollar declined again on Wednesday by 0.79% to 1.2584 – the lowest level in nearly two years. During the month (UTD) the Euro/U.S Dollar fell by 4.95%; it seems that many consider the possibility of Greece exiting the EU as a viable option. Furthermore, other “risk currencies” including the Australian dollar and Canadian dollar also depreciated during Wednesday by 0.64% and 0.44%, respectively. Since these currencies pairs are still linearly correlated with bullion prices, if the U.S dollar will continue to trade up, bullion might also continue to fall. Currently the Euro is declining against the USD.
U.S. Treasuries / Gold– May
The U.S. 10-year Treasury yield resumed their descent on Wednesday and reached 1.73%. During May the 10 year treasury yield declined by 0.22 percent point. This decline in LT securities yields may indicate that the demand for “secure investments” continue to increase especially considering the developments in Europe. During May there was a low and positive correlation between the daily changes in U.S. long term Treasury yield and shifts in gold price. Nevertheless the trend of both indexes as seem in the chart below shows that both U.S. 10 yr yield and gold price have a downward trend during the month. The chart below suggests that if the LT U.S. treasury yield will continue to decline, it might indicate that gold will further tumble down.
Gold (June 2012 delivery) is traded at $1,556.2 per t oz. a $7.8 or 0.50% increase as of 06:12*.
Silver (June 2012 delivery) is at $27.68 per t oz – a $0.161 or 0.59% increase as of 06:12*.
Daily Outlook for May 24th
Gold and silver prices continued their downward trend during yesterday’s trading. The recent news of the rise in U.S new home sales along with the speculation around the future of Greece in the EU may have driven precious metals prices down. The upcoming report on the core durable goods and jobless claims might continue to play a role in direction of precious metals prices. If these reports will be positive metals might continue to trade down. Finally the upcoming German business climate survey might further pull down the Euro since the survey came out negative.
09:00 – German Business Climate Survey
09:30 – GB revised GDP Q1 2012
13:30 – U.S. Jobless Claims Weekly Report
13:30 – U.S Core Durable Goods
14:00 – ECB President Draghi Speaks
15:30 – EIA U.S. Natural Gas Storage Update
07:00 – German Consumer Climate
14:55 – U.S Consumer Sentiment by UoM
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