The precious metals market is reheating: The prices of silver and gold sharply rose yesterday. Their rally didn’t coincide with the developments in the forex markets. But the drop in the U.S stock market including the S&P500 may have contributed to the rally of gold and silver. In the U.S consumer confidence didn’t change and only slightly increase in August: The current index is set at 81.5, which is slightly above July’s index of 81. This little growth in the index may have disappointed investors. Will precious metals prices continue their rally? On today’s agenda: U.S. Pending Home Sales, Gfk German Consumer Climate Survey, Euro Area Monetary Development, BOE Governor Carney Speaks, and Australia Private New Capital Expenditure.
Here is a short outlay for precious metals for Wednesday, August 28th:
Gold and Silver Prices Review – August Update
On Tuesday, gold bounced back by 1.96% to $1,419.00 – the highest level since late May; Silver sharply increased by 2.67% to $24.65. During August, gold increased by 8.19%; silver rallied by 25.59%.
In the chart below are the normalized rates of precious metals for 2013 (normalized to 100 as of July 31st). The prices of gold and silver have had an upward trend during the past several weeks.
The ratio between the two precious metals fell again on Tuesday to 57.6. During August, the ratio fell by 13.85% as silver has out-performed gold.
See here the weekly outlook for gold and silver for August 26-30.
On Today’s Agenda
Gfk German Consumer Climate Survey: This survey estimates Germany’s consumers’ economic climate including past and future economic conditions (on a monthly basis) for August. In the latest report for July 2013, the climate index slightly rose to 7;
Euro Area Monetary Development: This monthly update will refer to the changes of the M3, M1 and loans to private sector in the Euro area for July 2013. In the previous June report, the annual growth rate for M3 declined to 2.3%; M1 fell to 7.5%. Finally, the annual growth rate of loans to private sector reached -1.6%. This news suggests the EU inflation is falling again as loans and the growth rate of M1 and M3 keep declining. The progress of the EU monetary base is likely to affect the ECB rate decisions in the following months;
BOE Governor Carney Speaks: Governor Carney will speak at the East Midlands Conference Centre, in Nottingham;
U.S. Pending Home Sales: This report presents the shifts in pending home sales in the U.S for July; in the recent report, the pending home sales index slipped by 0.4% (month-over-month). These data are another signal for the changes in U.S’s housing market;
Australia Private New Capital Expenditure: This quarterly update shows the changes in the private new capital expenditures and expected expenditures for the second quarter of 2013. As of the previous quarter, the seasonal adjusted total of new capital expenditure tumbled down by 4.7% (Q-o-Q) and by 4.4% compared to the previous quarter in 2012. If this downward trend will continue, it may adversely affect the Aussie dollar, which tends to be strongly correlated with major commodities;
Currencies / Precious Metals– August Update
On Tuesday, the Euro/ USD currency pair slightly rose by 0.19% to 1.3393. During the month, so far, the Euro/USD edged up by 0.68%. Further, other currencies such as the Canadian dollar also appreciated yesterday against the U.S dollar by 0.26%. The correlations among gold, Euro and Aussie dollar slightly weakened in the past several weeks, e.g. the correlation between the Euro/USD and gold price is 0.30 during August. If the correlations among precious metals prices changes and leading currency pairs will remain weak, the effect of the changes in the relative value of USD compared to other currencies on gold and silver will diminish.
Current Gold and Silver Rates as of August 28th
Gold (short term delivery) is traded at $1,414.70 per t oz. a $5.5 or 0.39% decrease as of 02:24*.
Silver (short term delivery) is at $24.59 per t oz – a 2.2% increase as of 02:24*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:00 – Gfk German Consumer Climate Survey
09:00 – Euro Area Monetary Development
12:45 –BOE Governor Carney Speaks
15:00 – U.S. Pending Home Sales
02:30 – Australia Private New Capital Expenditure
08:55 – German Unemployment Rate
13:30 – Second U.S GDP 2Q 2013 Estimate
13:30 – U.S. Jobless Claims Weekly Report
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