Gold and silver prices slipped on Tuesday after they had increased on Monday and despite the appreciation of the Euro and Australian dollar. The U.S consumer confidence declined in August. Tomorrow will start the symposium at Jackson Hole that will include Bernanke’s speech on Friday. Currently, gold price is rising. On today’s agenda: KOF Economic Barometer, Second U.S GDP 2Q 2012 Estimate and .S. Pending Home Sales.
Here is a short outlook for precious metals for Wednesday, August 29th:
Precious Metals –August Update
On Tuesday, Gold decreased by 0.35% to $1,669.7; Silver also fell by 0.56% to $30.96. During August, gold increased by 3.4%; silver, by 10.9%.
As seen below, the chart shows the shifts of normalized prices of precious metals during the month (normalized to 100 as of July 31st). During recent weeks gold and silver resumed their rally.
The ratio between the two precious metals edged up on Tuesday to 53.93. During August the ratio fell by 6.77% as gold has under-performed silver.
On Today’s Agenda
U.S GDP 2Q 2012: This will be the second estimate of U.S’s second quarter 2012 real GDP growth and preliminary estimate of corporate profits. In the preliminary estimate, the U.S GDP during the second quarter expanded by 1.5%; in the 1Q2012 the GDP growth rate reached 2% (annual rate). This shows a fall in the growth rate for the US’s GDP. If there will be a sharp shift in the growth rate from first to second estimate, this could affect the US dollar and bullion prices. This could also influence FOMC members in anticipation for next month’s FOMC meeting;
U.S. Pending Home Sales: in the previous report the pending home sales index decreased by 1.4% (M-over-M). Based on last week’s results on housing sales (existing) the pending sales may continue to fall. In such a case US dollar may further deprecate;
KOF Economic Barometer: this report provides an outlook of the Swiss economy in the months to follow. In the previous press release, the report predicted that the Swiss Economy is headed towards an expansion in 2012;
Currencies / Bullion Market –August Update
The Euro/ USD changed direction and rose on Tuesday by 0.53% to 1.2565. During August (UTD) the Euro/USD rose by 2.12%. Further, other currencies including Aussie dollar also appreciated on Tuesday against the USD by 0.08%. The Canadian dollar also appreciated against the USD by 0.26%. The linear correlations among precious metals and Euro are still robust: during July and August, the correlation between the gold and EURO/USD reached 0.515 (daily percent changes); between gold and AUD/USD the correlation declined to 0.38. Therefore, if these currencies pairs will change direction and fall against the USD, it could also drag down the prices of precious metals. Currently, the Euro/USD is falling.
Current Gold and Silver Rates as of August 29th
Gold (September 2012 delivery) is traded at $1,671.4 per t oz. a $1.7 or 0.1% increase as of 06:32*.
Silver (September 2012 delivery) is at $30.935 per t oz – a $0.028 or 0.09% decrease as of 06:33*.
Daily Outlook for August 29th
The prices of precious metals changed direction and declined on Tuesday after they trade up in recent days. The recent rise of the Euro and Australian dollar may have curbed the decline of the rates of bullion. If these currencies will resume their fall, then they may pull down gold and silver. The upcoming U.S report regarding the GDP and pending home sales may affect not only the USD but also bullion rates. The European reports regarding KOF Economic Barometer could affect the path of the Euro, which is strongly correlated with bullion rates. Finally, the speculations around Bernanke’s position regarding the future steps of the FOMC will continue until he will give his speech at Jackson Hole on Friday.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
08:00 – KOF Economic Barometer
13:30 – Second U.S GDP 2Q 2012 Estimate
15:00 – U.S. Pending Home Sales
15:30 – U.S Crude Oil Stockpiles Report
All Day – Jackson Hole Symposium
Tentative – Italian 30 Year Bond Auction
13:30 – U.S. Jobless Claims Weekly Report
15:30 – EIA U.S. Natural Gas Storage Update
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