The prices gold and silver changed direction again, much like in the past couple of weeks, and declined. The prices of precious metals have shifted with an unclear trend in the past couple of weeks. The recent decision of the RBA to cut its cash rate by 0.25pp to 3.25%, which is still its lowest level since 2009, dragged down the Aussie dollar, which may have also contributed to the decline of bullion rates. Currently, the prices of gold and silver are rising. Other items on today’s agenda include: ADP estimate of U.S. non-farm payroll, U.S. ISM Non-Manufacturing PMI and Australian Retail Sales.
Here is a short outlook for precious metals for Wednesday, October 3rd:
Precious Metals –October Update
On Tuesday, Gold changed direction from Monday and declined by 0.43% to $1,775.6; Silver also decreased by 0.81% to $34.67. During the week, gold edged up by 0.1%; silver, by 0.27%.
As seen below, the chart shows the changes of normalized prices of precious metals in the last several of weeks (normalized to 100 as of September 13th). During the past several weeks the prices of gold and silver moved with an unclear trend.
The ratio between the two precious metals increased on Tuesday to 51.22. During October, the ratio slipped by 0.17% as gold has slightly under-performed silver.
On Today’s Agenda
ADP estimate of U.S. non-farm payroll: ADP will publish its estimate for the upcoming U.S non-farm payroll change during September 2012 in anticipation for the upcoming no-farm report to be published by Tuesday;
U.S. ISM Non-Manufacturing PMI: This report will refer to September. During August 2012 this index rose to 53.7% – this means the non-manufacturing is expanding and at a slightly faster rate than in the previous month; this index may affect forex and commodities trading;
Australian Retail Sales: According to the previous report, the retail sales (seasonally adjusted) decline by 0.8% in July; this news may affect the strength of the Aussie dollar;
Currencies / Bullion Market – October Update
The Euro/ USD rose on Tuesday by 0.23% to 1.292. During the month, the Euro/USD rose by 0.47%. Alternatively, some other currencies including Aussie dollar depreciated yesterday against the USD by 0.93%. The decision of the RBA to cut the cash rate pulled down the Aussie dollar yesterday. The correlation between gold and Euro and other “risk currencies” remains mid-strong and positive: during September/October, the linear correlation between the gold and EURO/USD was 0.63 (daily percent changes); the relation between gold and AUD/USD is 0.7. The list of correlation among several leading currencies pairs and bullion rates is indicated below. The shift in the Aussie dollar and Canadian dollar may have contributed to the decline of gold price. If these currencies and the Euro will continue to trade down against the USD, then they are likely to pull up gold and silver. Currently, the Euro/USD is trading down.
Current Gold and Silver Rates as of October 3rd
Gold (November 2012 delivery) is traded at $1,780.5 per t oz. a $4.9 or 0.28% increase as of 11:06*.
Silver (November 2012 delivery) is at $34.795 per t oz – a $0.126 or 0.36% increase as of 11:06*.
Daily Outlook for October 3rd
The prices of precious metals changed direction and fell on the second day of the week. This zigzag from gains to losses may continue in the near future until there will be an actual fundamental shift that could attract bullion traders and investors back into these precious metals. The decision of the RBA to cut the rate may continue having adverse effects on the bullion market via the decline in the Aussie dollar. The ongoing speculation around Spain’s next move could affect not only the Euro, but also bullion rates. Today’s publication of the U.S ISM non-manufacturing PMI could affect the USD, stocks and commodities if the report will keep showing faster growth in the non-manufacturing sectors in the U.S. Finally, if the Euro and Aussie dollar will trade down, then they could also pull down the prices of precious metals.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
13:15 – ADP estimate of U.S. non-farm payroll
15:00 – U.S. ISM Non-Manufacturing PMI
02:30 – Australian Retail Sales
Tentative – French 10 Year Bond Auction
12:00 – Great Britain Bank Rate & Asset Purchase Plan
12:45 – ECB Press Conference and Euro Rate Decision
13:30 – U.S. Jobless Claims Weekly Report
19:00 – Minutes of September’s FOMC Meeting
Tentative – Bank of Japan – Rate Decision and Monetary Policy Statement
For further reading: