Gold and silver prices continue to zigzag from gains to losses: yesterday both precious metals declined. This fall came after both metals hiked on Monday. The fall in the U.S consumer confidence survey didn’t seem to affect the financial markets as U.S stock markets increased and the USD edged up against the Euro. There are reports that suggest China might consider adding a stimulus plan to boost the economy. If this news will hold up and turn into reality it could also help rally precious metals. The speculation around the upcoming EU Summit that will start tomorrow continues to run high. Currently gold and silver are falling. On today’s agenda: U.S Core Durable Goods, U.S. Pending Home Sales, and Japan Retail Sales. Here is a short outlook for gold and silver for Wednesday, June 27th:
Precious Metals –June Update
Gold price fell on Tuesday by 0.85% to $1,574.9; silver also declined by 1.75% to $27.1. During the month gold increased by 0.68% while silver fell by 2.36%.
The chart below shows the normalized rates of these precious metals during June (normalized to 100 as of May 31st). The chart shows how both gold and silver dwindle last week and have yet to recover from it.
According to the latest U.S. consumer confidence survey, the consumer confidence index fell again in June compared to last month: The index decreased by 2.4 percent points from 64.4 in May to 62 in June. American consumers’ short term outlook in U.S. business conditions was less upbeat in June than a month earlier. On the other hand, the consumers’ assessment of current business and labor conditions has slightly improved during the month. This news may weaken the US dollar and thus may positively affect bullion rates.
On Today’s Agenda
U.S Core Durable Goods: This report will examine the changes in U.S. orders of durable goods in the manufacturing sector during May. This report may indirectly show the shift in U.S. demand for commodities. As of April , new orders of manufactured durable goods increased by $0.3 billion to $215.5 billion; if this report will continue to be positive then it could adversely affect precious metals prices;
U.S. Pending Home Sales: in the recent report the pending home sales index fell by 5.5% (M-over-M). These data are another indicator for the development in America’s real estate market; based on last week’s results on housing sales (new and existing) the pending sales may continue to fall. In such a case US dollar may further weaken;
Japan Retail Sales: According to the previous report, the Japanese retails sales rose by 5.8%; this report could affect the path of the Yen currency, which is also correlated with bullion rates;
Currencies / Gold & Silver Market – June Update
The Euro/US Dollar declined on Tuesday by 0.1% to 1.2492. During the month (UTD) the Euro/U.S Dollar increased by 1.02%. Alternatively, other exchange rates including the Aussie dollar and Canadian dollar appreciated on Tuesday against the USD by 0.53% and 0.53%, respectively. The weak Euro is likely to continue adversely affecting gold & silver rates. As indicated in the chart below the moving (21 business days) linear correlation between Euro/USD and gold is still strong, positive and robust. The current linear correlation stands on 0.36. If the U.S dollar will continue to appreciate against the Euro, it may pull down bullion rates. Currently the Euro is edging down against the USD.
Current Gold and Silver Rates as of June 27th
Gold (July 2012 delivery) is traded at $1,569.8 per t oz. a $5.1 or 0.32% decrease as of 06:20*.
Silver (July 2012 delivery) is at $27.01 per t oz – a $0.093 or 0.34% decrease as of 06:21*.
Daily Outlook for June 27th
Gold and silver may have started off the week on a positive note but they have soon shifted back and declined yesterday. These metals might continue to fall today. The ongoing concerns around the EU debt crisis might keep the Euro weak. Since the Euro continues to be strongly correlated with precious metals, if the Euro will continue to dwindle it could pull down gold and silver. The upcoming US report could affect USD and bullion rates, especially if the report will show significant movement. Finally the upcoming Japanese report might affect not only the Yen but also indirectly affect bullion rates via the Yen which is also correlated with them.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
13:30 – U.S Core Durable Goods
15:00 – U.S. Pending Home Sales
15:30 – U.S Crude Oil Stockpiles Report
00:50 – Japan Retail Sales
09:30 – Great Britain Current Account
13:30 – Final U.S GDP 1Q 2012 Estimate
All Day (for two days) – European Council Summit
13:30 – U.S. Jobless Claims
15:30 – EIA U.S. Natural Gas Storage Update
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