The prices of gold and silver continued their upward trend and rose for the second consecutive day. The recent fall of other commodities prices and major risk currencies such as Euro, and Aussie dollar didn’t seem to slow down the rally of precious metals yesterday. From the U.S: retail sales rose by 0.5% in December compared to November. On the other hand, PPI inched down by 0.2%. This news items may have had a modest effect on commodities and stock markets. Currently, the prices of gold and silver are declining. On today’s agenda: Euro Area CPI, U.S Core Consumer Price Index, U.S. TIC Long Term Purchases and Australia Employment Report.
Here is a short outlook for precious metals for Wednesday, January 16th:
Precious Metals – January Update
On Wednesday, the price of gold increased again by 0.87% to $1,683.9; Silver price also rose by 1.34% to $31.5. During January, gold rose by 0.54%; silver, by 4.4%.
As seen below, the chart shows the changes in the normalized prices of precious metals during the month (normalized to 100 as of December 30th). During recent days silver and gold had a modest upward trend.
The ratio between the two precious metals declined again on Wednesday to 53.46. During the month the ratio fell by 3.7% as gold under-performed silver.
On Today’s Agenda
Euro Area CPI: according to the recent report the annual CPI fell to 2.2%, which is slightly higher than ECB’s target inflation; if the inflation will decline again, it could raise the odds of ECB lower its cash rate in the near future;
U.S Core CPI: According to the U.S Bureau of Labor statistics during November, the CPI fell by 0.3% (M-o-M); the core CPI edged up by 0.2%; the core index rose over the last twelve months by 1.9%.
U.S. TIC Long Term Purchases: The report will show the developments in the US long term treasuries for November 2012. In the recent report regarding October 2012, the net foreign sales of U.S Treasuries longer-term notes reached only $1.3 billion;
Australia Employment Report: in the last report regarding November the rate of unemployment declined to 5.2%; the number of employed (seasonally adjusted) rose by 13,900 people; the number of unemployed declined by 16,300 during November compared to October. This report could affect the Aussie dollar (see here the recent report);
Currencies / Bullion Market – January Update
The Euro/ USD changed direction and declined on Wednesday by 0.54% to 1.3306. During the month, the Euro/USD increased by 0.86%. Moreover, some currencies such as Aussie dollar also depreciated yesterday against the USD by 0.03%. The recent decline of “risk currencies” didn’t seem to curb the rally of precious metals yesterday. Furthermore, the correlations among gold, Euro remained weaker than in the past: during the month, the linear correlation between gold and USD/CAD reached -0.35 (daily percent changes); the linear correlation between the gold and AUD /USD reached 0.37 (daily percent changes). Thus if the Euro and other “risk currencies” will appreciate against the USD, they are might positively affect bullion rates.
Current Gold and Silver Rates as of January 16th
Gold (short term delivery) is traded at $1,679.3 per t oz. a $4.6 or 0.27% decrease as of 23:17*.
Silver (short term delivery) is at $31.38 per t oz – a $0.15or 0.49% decrease as of 23:17*.
Daily Outlook for January 16th
Prices of precious metals rose in the past couple of days. This rally, however, didn’t coincide with the rise in other commodities prices and “risk currencies”. The recent positive news – the U.S retail sales report – of the modest progress in the U.S economy didn’t seem to help rally the stocks and commodities markets yesterday. The U.S PPI declined by 0.2% and may have contributed to the rise of precious metals that tend to be negatively related to the PPI. The upcoming U.S reports including: TIC Long Term Purchases and CPI could affect not only the USD but also precious metals rates. If these reports will show the U.S economy isn’t progressing, they might pull up precious metals prices. The upcoming Euro Area CPI report could affect the Euro and consequently commodities prices. Finally, if the Euro and other “risk currencies” will rally against the USD, they might positively affect gold and silver.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
10:00 – Euro Area CPI
13:30 –U.S Core Consumer Price Index
14:00 – U.S. TIC Long Term Purchases
02:30 – Australia Employment Report
Tentative – French 10 Year Bond Auction
9:00 – ECB Monthly Bulletin
Tentative – Spanish 10 Year Bond Auction
13:30 – U.S. Jobless Claims Weekly Report
13:30 – U.S. Housing Starts & Building permits
15:00 – Philly Fed Manufacturing Index
03:00 –China Fourth Quarter GDP 2012
For further reading: