Despite the many news items on yesterday’s agenda including the ECB’s rate decision there were little changes in policy or surprises: ECB, as expected, didn’t change its policy and left the basic interest rate flat. But the main issue was Draghi’s press conference in which he voiced his concern about the recovery of the EU economy. This news may have contributed to the weakening of the Euro against the USD. In the U.S the non-manufacturing PMI report was positive as the index spiked to 58.6 in August. Jobless claims fell by 9k to reach 323k; for August, ADP estimates number of jobs added was 176k – if tomorrow’s figure will exceed this benchmark this could pull up the USD and drag further down gold and silver prices. Will gold and silver bounce back? Update: Non-farm payroll rose by 169k. On today’s agenda: U.S. Non-Farm Payroll Report, Canada’s Employment Report, Great Britain Manufacturing Production, and Canada’s Ivey PMI.
Here is a short overview for bullion for Friday, September 6th:
Gold and Silver Prices Review – September Update
On Thursday, gold declined again by 1.22% to $1,372.60; Silver also decreased by 0.72% to $23.22. During September, gold decreased by 1.66%; silver, by 1.12%.
In the chart below are the normalized prices of precious metals for 2013 (normalized to 100 as of August 9th). The prices of gold and silver have fallen in the past couple of days.
The ratio between the two precious metals inched down on Thursday to 59.12. During September, the ratio decreased by 0.55% as silver has slightly out-performed gold.
See here the weekly outlook for gold and silver for September 2-6.
During the month, the U.S long term treasuries yields has increased (10 year notes reached 2.98% yield by Thursday); they have reached in September their highest level since late 2011. The relatively high yields may have coincided with the recent rise in gold and silver last month. These trends may suggest the market expects the Fed to taper QE3, which could pull down the pressure on long term yields.
On Today’s Agenda
U.S. Non-Farm Payroll Report: in the previous employment report for July 2013, the labor market slightly rose: The number of non-farm payroll employment rose by 162k – lower than the number many had anticipated; the U.S unemployment rate slipped to 7.4%; if in the upcoming report the employment will rise again by over 180 thousand (in additional jobs – the ADP estimated 176k), this may pull down the prices of gold and silver; the table below shows the relation between precious metals prices changes and the number of jobs added monthly.
Great Britain Manufacturing Production: This update will show the annual rate of GB’s manufacturing production as of July; in the previous report regarding June 2013 the index rallied by 1.9% (M-2-M); this news may affect the British Pound;
Canada‘s Employment Report: In the previous employment update for July 2013, unemployment remained inched up to 7.2%; the employment fell by 39.4k during last month. The next report might affect the Canadian dollar and consequently bullion;
Canada‘s Ivey PMI: This report shows the diffusion index based on surveyed purchasing managers; in the recent monthly update, the index decreased to 48.4.
Currencies / Precious Metals– September Update
On Thursday, the Euro/ USD currency pair fell by 0.66% to 1.3120. During September, the Euro/USD declined by 0.77%. Further, other currencies such as the Canadian dollar and Aussie dollar also depreciated yesterday against the U.S dollar by 0.09% and 0.56%, respectively. The correlations among gold, Euro and Aussie dollar weakened in recent weeks, e.g. the correlation between the AUD/USD and gold price is 0.19 during the past several weeks.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
Today
09:30 – Great Britain Manufacturing Production
13:30 – U.S. Non-Farm Payroll Report
13:30 – Canada’s Employment Report
15:00 – Canada’s Ivey PMI
For further reading: