The rally of precious metals didn’t last long as both gold and silver changed direction and tumbled down on Wednesday. Their recent fall erased their gains from Tuesday. Their unclear trend in the past couple of days doesn’t seem related to the developments. Gold and silver’s recent unclear trend coincided with the changes in the crude oil market. The rise of the Australian GDP by 2.6% (y-o-y) along with the latest decision of RBA to keep its interest rate flat 2.5% may have contributed to the sharp rally of Aussie dollar in the past couple of days. This currency’s rally, however, didn’t help pull up commodities prices. In the U.S, the latest trade balance report revealed a rise in the trade balance of goods and services to $39.1 billion during July – the rise was mainly due to drop in exports and rise in imports. Will gold and silver keep its recent unclear trend? On today’s agenda: ECB Rate Decision, U.S Factory Orders, U.S ISM Non-Manufacturing PMI, BOE Rate Decision & Asset Purchase Plan, Australian Trade Balance, German Factory Orders, Japan’s monetary policy meeting, U.S. Jobless Claims, and ADP estimate of U.S. non-farm payroll.
Here is a short overview for bullion for Thursday, September 5th:
Gold and Silver Prices Review – September Update
On Wednesday, gold changed direction and fell by 1.57% to $1,389.60; Silver also plummeted by 4.15% to $23.38. During the month, gold decreased by 0.44%; silver, by 0.40%.
In the chart below are the normalized prices of precious metals for 2013 (normalized to 100 as of July 31st). The prices of gold and silver haven’t done much in the past several days.
The ratio between the two precious metals rallied on Wednesday to 59.43. During September, the ratio decreased by 0.04% as silver has slightly out-performed gold.
The gold and silver futures volumes of trade have fallen and reached on Wednesday 150 thousand and 52 thousand, respectively. For gold and silver, the volume is at its lowest for this week. If the volume will start to rise during the remainder of the week, this could suggest the odds of sudden sharp move in the prices of gold and silver due to high volume will increase.
See here the weekly outlook for gold and silver for September 2-6.
On Today’s Agenda
ECB Rate Decision: ECB will announce its cash rate for this month. In the past meetings the ECB left its rate at 0.50%; some suspect Draghi may keep ECB’s monetary policy unchanged in the upcoming meeting. The upcoming German elections are likely to keep ECB’s policy unchanged in the near future. Nevertheless, if ECB will cut its cash rate, or cut further its deposit rate, the Euro is likely to decline, which may also pressure down bullion rates;
Japan’s monetary policy meeting: In the upcoming Japanese monetary policy meeting, BOJ members will decide on any changes to the bank’s current asset purchase program. This decision could affect the Japanese yen;
German Factory Orders: The forthcoming report will refer to August. In the last update, the factory orders rose by 3.8% during July;
BOE Rate Decision: Bank of England will decide on its basic rate for September 2013; the MPC will also state of any new shifts to its asset purchase pogrom; as of August, BOE kept its rate flat at 0.5% and the asset purchase plan s at £375 billion;
U.S. Jobless Claims: In the recent report the jobless claims decreased by 6k to reach 331k; this upcoming weekly update may affect the U.S dollar and consequently precious metals;
ADP estimate of U.S. non-farm payroll: ADP will come out with its estimate for the next U.S non-farm payroll changes for August 2013 that will be published tomorrow;
U.S. ISM Non-Manufacturing PMI: In the recent report, this index rose to 56% – thus, the non-manufacturing is expanding at a faster rate than in last month; this index may affect bullion prices;
U.S Factory Orders: This report will refer the changes in U.S. factory orders of manufactured durable goods during August; in the previous report factory orders increased by 1.5%; this report will offer some insight regarding the developments of the U.S economy;
Currencies / Precious Metals– September Update
On Wednesday, the Euro/ USD currency pair slightly rose by 0.28% to 1.3207. During the month, the Euro/USD slipped by 0.11%. Further, other currencies such as the Canadian dollar and Aussie dollar also appreciated yesterday against the U.S dollar by 0.37% and 1.21%, respectively. The correlations among gold, Euro and Aussie dollar weakened in recent weeks, e.g. the correlation between the Euro/USD and gold price is 0.17 during August-September.
Current Gold and Silver Rates as of September 5th
Gold (short term delivery) is traded at $1,368.80 per t oz. a $21.20 or 1.53% decrease as of 15:41*.
Silver (short term delivery) is at $23.17 per t oz – a 1.07% decrease as of 15:41*.
(* GMT)
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
Today
02:30 – Australian Trade Balance
Tentative – Japan’s monetary policy meeting and press conference
11:00 – German Factory Orders
12:00 – BOE Rate Decision & Asset Purchase Plan
12:45 – ECB Rate Decision
13:15 – ADP estimate of U.S. non-farm payroll
13:30 – U.S. Jobless Claims Weekly Report
15:00 – U.S. ISM Non-Manufacturing PMI
15:00 – U.S Factory Orders
Tomorrow
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
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