The prices of precious metals have changed direction and rallied yesterday after they had declined for three consecutive business days. Their rally coincided with the rally of the Euro/USD and the drop of U.S stock markets. In the U.S, new orders of manufactured durable goods inched up by 0.1% to reach $224.9 billion. Was the recent recovery of gold and silver driven by change in fundamental estimates or short term speculations? Today’s U.S reports might shed some light on this question. If the upcoming reports don’t meet expectations or even disappoint, gold and silver might continue their recovery. On today’s agenda: Euro Area Monetary Development, GB Current Account, Final U.S GDP 2Q 2013 Estimate, U.S. Jobless Claims, and U.S Pending Home Sales.
Here is a short overview for precious metals for Thursday, September 26th:
Gold and Silver Prices Review – September Update
On Wednesday, gold changed direction and sharply rose by 1.51% to $1,335; Silver also increased by 1.39% to $21.84. During September, gold decreased by 4.29%; silver, by 6.98%. In the chart below are the normalized rates of precious metals for 2013 (normalized to 100 as of August 30th). The prices of gold and silver have mostly declined during the month.
The ratio between the two precious metals inched up again on Wednesday to 61.17. During September, the ratio increased by 2.89% as silver has under-performed gold.
St. Deviation of Gold and Silver
Due to the sharp changes in the bullion markets during the month, the volatility of precious metals prices has risen during September compared to previous months: The standard deviations of gold and silver (daily percent changes) are currently higher than the standard deviations in the past several months. The chart below shows the changes in the standard deviations of bullion prices. For silver the standard deviation is currently at its highest level for the past twelve months.
See here the weekly outlook for gold and silver for September 23-27.
On Today’s Agenda
Euro Area Monetary Development: In the latest July report, the annual growth rate for M3 inched down to 2.2%; M1 declined to 7.1%. Finally, the annual growth rate of loans to private sector reached -1.4%. This news suggests the EU inflation is declining again as loans continue to tumble and the growth rate of M1 and M3 diminishes;
GB Current Account: Based on the latest update, the deficit expanded to 14.5 billion pounds. This report might affect the direction of the British Pound;
Final U.S GDP 2Q 2013 Estimate: In the recent estimate the U.S GDP rose by 2.5% in the second quarter of 2013. If in the last estimate, the growth rate for the second quarter is substantially revised, this could affect not only the US dollar but also precious metals;
U.S. Jobless Claims Weekly Report: In the latest report the jobless claims rose by 15k to 294k; this upcoming weekly update may affect the U.S dollar and consequently precious metals;
U.S. Pending Home Sales: This report shows the shifts in pending home sales in the U.S for August; in the recent report, the pending home sales index dropped by 1.3% (month-over-month). These data are another signal for the developments in U.S’s housing market; if the housing data shows additional fall in sales, it may pull back the U.S dollar;
Currencies / Precious Metals– September Update
On Wednesday, the Euro/ USD currency pair changed direction and also rose by 0.39% to 1.3526. During the month, so far, the Euro/USD rose by 2.30%. On the other hand, other currencies such as the Aussie dollar and Canadian dollar slightly depreciated yesterday against the U.S dollar by 0.24% and 0.14%, respectively. The correlations among silver, Euro and Canadian dollar have weakened during the month, e.g. the correlation between the USD/CAD and silver price is only -0.04 during September. These findings suggest the changes in the forex markets have little effect on the developments in the prices of gold and silver.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:00 – Euro Area Monetary Development
09:30 – GB Current Account
13:30 – Final U.S GDP 2Q 2013 Estimate
13:30 – U.S. Jobless Claims
15:00 – U.S. Pending Home Sales
08:00 – KOF Economic Barometer
10:00 – ECB President Speaks
13:30 – U.S Personal spending
14:55 – UoM Consumer Sentiment
For further reading: