The prices gold and silver moved in an unclear trend in the past week. This indecisiveness in the markets might be stemmed by the uncertainty regarding the FOMC’s next step and U.S policymakers’ inability to reach an agreement on budget and raising the debt ceiling. The recent news is that The House and the Senate weren’t able to decide on the budget so that the U.S government is closed. This news, however, has yet to cause waves in the financial markets. Perhaps the debate over raising the debt ceiling will do just that. This uncertainty is likely to benefit, to a certain degree, precious metals prices. The latest decision of RBA to maintain its cash rate unchanged at 2.5% is currently pulling up the Aussie. This trend may also help pull up gold and silver prices that tend to be correlated to this currency. In other news, on today’s agenda: U.S, GB, and China Manufacturing PMI, Australian Retail Sales, and EU Unemployment Rate.
Here is a short overview for precious metals for Tuesday, October 1st:
Gold and Silver Prices Recap – October Update
On Monday, gold fell again by 0.87% to $1,326.8; Silver also decreased by 0.45% to $21.68. During September, gold decreased by 4.94%; silver, by 7.64%. In the chart below are the normalized rates of bullion for 2013 (normalized to 100 as of August 30th). The prices of gold and silver have mostly fallen in recent weeks.
The gold and silver futures volumes of trade have declined and reached on Monday 124 thousand and 34 thousand, respectively. For both metals these trade volumes are the lowest in weeks. If the volume continues to drop this week, it could suggest the odds of sudden sharp move in the prices of gold and silver as a result of high volume will decrease.
On Today’s Agenda
U.S. Manufacturing PMI: This report will pertain to September 2013. In August, the index slightly increased to 55.7%; this means the manufacturing is growing at a slightly faster rate;
China Manufacturing PMI: As of August, the Manufacturing PMI rose for third consecutive month to 51 – i.e. China’s manufacturing sectors are expanding at a slightly faster rate; in the previous flash PMI report, the index rose to 20.3. If in the upcoming report the PMI continues to pull up, it could signal growth in China’s manufacturing sectors, which could also positively affect precious metals prices;
Australian Retail Sales: This monthly update will pertain to August 2013. In the latest update, the seasonally adjusted retail sales inched up by 0.1% during July; this news may affect the Aussie dollar, which tends to be correlated with oil and gold prices;
Reserve Bank of Australia – Cash Rate Statement: The last time the RBA lowered its cash rate was back in August. The current rate is set at 2.50% – its lowest level in recent years, which contributed to depreciation of the Australian dollar. The current expectations are that RBA will maintain its cash rate flat this time;
GB Manufacturing PMI: This report will refer to Great Britain’s manufacturing sector in September 2013. In the last update regarding August 2013 the index rose again to 57.2. This rate gain means the manufacturing sector is growing at a faster pace; this index might affect GB Pound;
EU Unemployment Rate: Last month’s report showed the rate of unemployment remained unchanged at the high rate of 12.1%. If the rate of unemployment remains high, it could adversely affect the Euro;
Currencies / Precious Metals– October Update
On Monday, the Euro/ USD currency pair inched up by 0.04% to 1.3528. During September, the Euro/USD rose by 2.31%. Conversely, other currencies such as the Yen and Canadian dollar slightly depreciated yesterday against the U.S dollar by 0.03% and 0.03%, respectively. The correlations among gold, Euro and Yen have weakened in recent weeks, e.g. the correlation between the USD/ Yen and gold price is 0.24 during September. The chart below shows the correlations.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
02:00 – China Manufacturing PMI
02:30 – Australian Retail Sales
05:30 – Reserve Bank of Australia – Cash Rate Statement
09:30 – GB Manufacturing PMI
10:00 – EU Unemployment Rate
15:00 – U.S. Manufacturing PMI
02:30 – Australian Trade Balance
08:00 – Spain’s unemployment Change
09:30 – GB Construction PMI
12:45 – ECB Rate Decision
13:15 – ADP estimate of U.S. non-farm payroll
20:30 – Bernanke’s Speech
For further reading:
- Gold and Silver Weekly Forecast for September 30- October 4
- Weekly Outlook of Financial Markets for September 30- October 4
- Gold and Silver Yearly Outlook For 2013
- Is the Golden Era of Gold Over?
- Will Gold Recover from its Recent Fall?