The price of gold changed direction and fell on Tuesday after it had increased in the previous two business days. Conversely, the price of silver remained nearly unchanged. In the U.S the retail sales report came out and showed a moderate gain in retail sales of 0.2% during July. This news may have helped pull up the U.S stock market and drag down gold price. The recent developments in Japan including the lower than expected GDP growth rate and changes in taxes may have contributed to the dragged down the Japanese yen. Where will gold and silver continue from here? On today’s agenda: Great Britain Claimant Count Change, MPC Asset Purchase and Rate Votes, EU Second Quarter GDP 2013, German 10 Year Bond Auction, and U.S. Producer Price Index.
Here is a short outlay for precious metals for Wednesday, August 14th:
Gold and Silver Prices Review – August Update
On Tuesday, gold changed direction and fell by 1.02% to $1,321.30; Silver inched up by 0.02% to $21.34. During August, gold rose by 0.68%; silver rallied by 8.74%.
In the chart below are the normalized prices of gold and silver for 2013 (normalized to 100 as of July 10th). The prices of gold and silver have rallied during most of August.
The gold and silver futures volumes of trade remained low in recent days and reached on Tuesday 158 thousand and 75 thousand, respectively. If the volume will remain low for the rest of this week, this could suggest the odds of sudden sharp movement in the prices of gold and silver due to low volume will decline. The chart below shows the developments in the volume of trade in the past several weeks.
See here the weekly outlook for gold and silver for August 12-16.
On Today’s Agenda
Great Britain Claimant Count Change: As of last month, the number of unemployed in GB had declined by 21.2k; the rate of unemployment remained flat at 7.8%;
MPC Asset Purchase and Rate Votes: in the previous MPC meeting, the Bank left the rate unchanged at 0.5% and the asset purchase program at £375 billion; this vote count will show how many MPC members voted on any changes to the asset purchase program or interest rate;
EU Second Quarter GDP 2013 (preliminary): In the first quarter of 2013, the EU economy contracted by 0.2%. If the EU economy will continue to contract, this could drag down the Eur;
German 10 Year Bond Auction: the German government will have its monthly bond auction; in the last bond auction, which was held at the middle of July, the average rate reached 1.57% – its highest level since this year;
U.S PPI: This report will present the developments in the PPI during July 2013, i.e. the inflation rate from the producers’ side. In the last report regarding June, this index for finished goods rose by 0.8% compared with May’s level and the core PPI by 0.2%;
Currencies / Precious Metals – August Update
The Euro/ USD currency pair declined again on Tuesday by 0.28% to 1.3263. During the month (up-to-date), the Euro/USD edged down by 0.29%. Moreover, other currencies such as the Aussie dollar and Japanese yen also depreciated yesterday against the U.S dollar by 0.37% and 1.33%, respectively. The correlations among gold, Euro and Aussie dollar sharply weakened, e.g. the correlation between the Euro/USD and gold price is 0.24 during July-August.
Current Gold and Silver Rates as of August 14th
Gold (short term delivery) is traded at $1,318.70 per t oz. a $1.8 or 0.14% decrease as of 07:22*.
Silver (short term delivery) is at $21.30 per t oz – a 0.20% decrease as of 07:22*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:30 – Great Britain Claimant Count Change
09:30 –MPC Asset Purchase and Rate Votes
10:00 –EU Second Quarter GDP 2013
Tentative – German 10 Year Bond Auction
13:30 – U.S. Producer Price Index
09:30 – GB Retails Sales
13:30 – U.S. Jobless Claims Weekly Report
13:30 – U.S Core Consumer Price Index
14:00 – U.S. TIC Long Term Purchases
15:00 – Philly Fed Manufacturing Index
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