Gold and silver prices change direction and declined again after they have both spiked in the last two days of last week. On today’s agenda: U.S. Existing Home Sales (update: Housing sales rose in April), BOJ Rate Decision, Great Britain CPI, FOMC Member Lockhart Speaks, Great Britain Net borrowing and Japanese Trade balance. Currently precious metals prices are falling.
Here is a short outlook for gold and silver prices for Tuesday, May 22nd:
Precious Metals – May Update
Gold price changed direction and declined on Monday by 0.2% to $1,588.7; silver also decreased by 1.37% to $28.32. During the month gold declined by 4.54% and silver by 8.69%.
The chart below presents the normalized prices of metals during month so far (both metals rates are normalized to 100 as of April 30th).
The ratio between two precious metals also changed direction and rose on Monday to 56.1. During the month the ratio increased by 4.55% as silver has moderately underperformed gold during the month. In the chart below are the developments of this ratio during May.
U.S. Existing Home Sales: in last month’s report for March the number of homes sold declined by 2.3% to a seasonally adjusted annual rate of 4.48 million home sales; if this trend will continue it may curb the recent rally in the USD;
BOJ – Rate Decision and Monetary Policy Statement: Bank of Japan will announce interest rate decision and its monetary policy. There are those who speculate the BOJ will expand the stimulus plan even though the recent GDP growth rate during Q1 2012 of Japan was higher than expected by many. If the BOJ will introduce another monetary stimulus plan, this news might affect the Yen and consequently bullion prices;
Japanese Trade balance: The Japanese trade balance deficit for March increased by 93.3% (Mo-M) to 621.3 billion Yen (roughly $7.76 billion) deficit. This increase is mainly due to the rise in imports. Japan is among the leading importing countries of commodities, including gold;
Forex / Gold & Silver Market – May Update
The Euro/U.S Dollar continued to rise on Monday by 0.27% to 1. 2817. During the month (UTD) the Euro/U.S Dollar fell by 3.19%; furthermore, the Aussie dollar and Canadian dollar also appreciated on Monday by 0.72% and 0.47%, respectively. Since these currencies pairs are still linked with precious metals prices, if the U.S dollar will change direction and further appreciate, bullion prices may continue with their descent. Currently the Euro is edging down against the USD.
Current Gold and Silver Prices as of May 22nd
Gold (June 2012 delivery) is traded at $1,593.5 per t oz. a $4.8 or 0.3% increase as of 23:13*.
Silver (June 2012 delivery) is at $28.49 per t oz – a $0.169 or 0.6% increase as of 23:13*.
Daily Outlook for May 22nd
Gold and silver prices resumed their descent despite the deprecation of the US dollar. The rally in the U.S stock markets may have helped pull oil prices up during yesterday’s trading but didn’t do the same for the metals. Today’s U.S related reports mainly the home sales report may affect the US dollar and consequently bullion market. If BOJ will introduce another stimulus plan it could promptly affect the forex markets which could also lead to a movement in commodities prices. I speculate there might be some gains in the precious metals during the day, but I still think the general direction for the week will be downward.
Here is a reminder of the top events and reports that are planned for today and tomorrow (all times GMT):
09:30 – Great Britain CPI
09:30 – Great Britain Net borrowing
11:15 – FOMC Member Lockhart Speaks
15:00 – U.S. Existing Home Sales
00:50 – Japanese Trade balance
Tentative – Bank of Japan – Rate Decision
09:30 – MPC Meeting Minutes
13:30 –Retails Sales Canada (March 2012)
15:00 – U.S. New Home Sales
15:30 – U.S Crude Oil Stockpiles Report
3:30– China flash Manufacturing PMI
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