Gold and silver didn’t do much again during yesterday as silver slipped and gold edged up. According the yesterday’s flash manufacturing PMI reports the Euro Zone and Germany continued to contract during July. Canada’s retail sales edged up by 0.3% during May. Australia’s CPI rose by 1.2% during Q2 2012 (annual terms). These reports may have affected these countries’ respective currencies. The EU related reports may have contributed to the weak Euro, which, in turn adversely affected bullion rates. If the USD will keep appreciating it could raise the chances of the FOMC intervening in the market and issuing QE3 just to weaken the USD. Currently gold and silver are rising. Update: The GB GDP contracted by 0.7% in Q2 2012. This news may help rally the Euro and weaken the GBP. On today’s agenda: U.S. New Home Sales, German 30 Year Bond Auction, German Business Climate Survey.
Here is a short outlook for precious metals for Wednesday, July 25th:
Precious Metals – July Update
Gold rose on Tuesday by 0.22% to $1,580.8; Silver decreased by 0.85% to $26.81. During July, gold fell by 1.46% and silver by 2.9%.
In the chart herein are the normalized rates of these precious metals during the month (normalized to 100 as of June 29th). As seen, during the last several weeks bullion demonstrated an unclear trend.
The ratio between the two precious metals rose again on Tuesday to 58.96. During July the ratio rose by 1.49% as gold slightly performed silver.
St. Deviation of Gold and Silver
The slow movement of both bullion rates is represented in the decline in precious metals prices’ volatility during the month: the standard deviations of gold and silver (daily percent changes) reached 0.89% and 1.4%, respectively.
On Today’s Agenda
U.S. New Home Sales: in the recent report (for May 2012), the sales of new homes rose by 7.6% to reach an annual rate of 369,000; if the number of home sales will continue to rally, it may further indicate a sign of recovery in the U.S real estate market which may also affect the strength of the US dollar.
German Business Climate Survey: This survey will refer to Germany’s business climate. In the recent report for July 2012, the business climate index declined from 106.9 in May to 105.3 in June; if this trend will continue, it might further pull down the Euro;
Flash GB GDP Q2 2012: This report will present the first estimate of the quarterly growth rate of the British economy during the second quarter of 2012; during the previous quarter the GB economy contracted by 0.2% (Q-2-Q);
German 30 Year Bond Auction: the German government will issue a bond auction; in the previous bond auction, which was held at the end of April, the average yield reached 2.41%;
Currencies / Gold & Silver Market – July Update
The Euro/US Dollar fell on Tuesday by 0.46% to 1.2061. During the month (UTD) the Euro/USDdecreased by 4.78%. Further, other currencies including Australian dollar and Canadian dollar also slightly depreciated on Tuesday against the USD by 0.37% and 0.32%, respectively. The correlations between gold and the above-mentioned currencies pairs remain robust: during July the correlation between the gold and EURO/USD reached 0.66 (daily percent changes). Therefore, if the Euro and AUD will change direction and rally, they may also pull up precious metals rates.
Current Gold and Silver Rates as of July 25th
Gold (August 2012 delivery) is traded at $1,585.9 per t oz. a $5.1or 0.32% increase as of 07:32*.
Silver (August 2012 delivery) is at $26.86 per t oz – a $0.049 or 0.18% increase as of 07:32*.
Daily Outlook for July 25th
Gold and silver didn’t do much yesterday as both precious metals moved by less than a percent point. The slow paced movement of precious metals may continue during the week. The ongoing appreciation of the USD against the Euro Aussie dollar and CHF is also keeping gold and silver from rising. If this direction will change and the Euro will rally, it could also pull up bullion rates. The upcoming reports regarding U.S GB and Germany could affect their respective currencies which in turn may affect precious metals rates. There may be some shifts in the general market direction but I still guess that during the week general direction of bullion rates will be downward during the week.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:00 – German Business Climate Survey
09:30 – Flash GB GDP Q2 2012
Tentative – German 30 Year Bond Auction
15:00 – U.S. New Home Sales
15:30 – U.S Crude Oil Stockpiles Report
09:00 – Euro Area Monetary Development
13:30 – U.S. Jobless Claims Weekly Report
13:30 – U.S Core Durable Goods
15:00 – U.S. Pending Home Sales
15:30 – EIA U.S. Natural Gas Storage Update
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