Gold and silver fell again for the second consecutive day. Their recent descent coincided with the fall of other leading risk currencies against the USD. In the U.S, jobless claims weekly update showed a decline of 6k in initial claims to reach 331k. Moreover, U.S GDP for the second quarter (second estimate came out yesterday: It was revised upward from 1.7% to 2.5% annual growth. These positive reports may have contributed to the strengthening of the USD and decline of gold and silver prices. Will gold and silver continue to decline today? On today’s agenda: German Retail Sale, KOF Economic Barometer, EU CPI Flash Estimate, EU Unemployment Rate, Canada’s GDP by Industry, U.S Personal spending, UoM Consumer Sentiment, and China Manufacturing PMI.
Here is a short outlay for precious metals for Friday, August 30th:
Gold and Silver Prices Review – August Update
On Thursday, gold fell again by 0.42% to $1,412.60; Silver decreased by 1.17% to $24.11. During August, gold increased by 7.63%; silver rallied by 22.81%.
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 have rallied during the month.
The ratio between the two precious metals increased again on Thursday to 58.60. During August, the ratio declined by 12.36% as silver has out-performed gold.
The gold and silver futures volumes of trade have sharply rose in the past several days and reached on Thursday 165 thousand and 91 thousand, respectively. These numbers are the highest in the past couple of weeks. If the volume will fall today, this could suggest the odds of sudden sharp changes in the prices of gold and silver due to low volume will decline. The chart below shows the volume of trading gold and silver futures in the CME during August.
See here the weekly outlook for gold and silver for August 26-30.
On Today’s Agenda
German Retail Sales: This monthly update will present the changes in German retail sales during July. In June 2013, retail sales changed direction and fell by 1.5% – lower than many had expected; if this report will show another drop in sales then it might weakened the Euro;
KOF Economic Barometer: this monthly report measures the estimate to the Swiss economy in the coming months;
EU CPI Flash Estimate: This index estimates the annual consumer price index of the Euro members. According to the previous estimate, the annual CPI reached 1.6%, which is still much lower than the ECB’s target inflation of 2%. If the inflation will start to pick up, it could indicate the EU economy is slowly picking up. These developments could influence the ECB when it’s time to decide on its interest rate; this news could affect the Euro/USD currency pair;
EU Unemployment Rate: This report estimates the progress of the EU economy from the labor point of view. Last month’s report showed the rate of unemployment remained flat at 12.1%, which is still a high rate. If this downward trend will persist, it could positively affect the Euro;
Canada‘s GDP by Industry: In the latest report regarding May 2013, the real gross domestic product rose by 0.2%. This report may affect the direction of the Canadian dollar, which is strongly linked with major bullion;
U.S Personal spending: this monthly report will refer to the changes in income and outlays in the U.S during July; in the last report regarding June the personal income rose by 0.3%;
UoM Consumer Sentiment (revised): University of Michigan will publish its revised consumer sentiment monthly report; this survey could offer information regarding the recent developments in U.S consumers’ sentiment; according to the latest report, the sentiment index increased to 85.1;
China Manufacturing PMI: Last month’s report regarding July 2013 the Manufacturing PMI increased to 50.3 – i.e. China’s manufacturing sectors is expanding at a slightly faster pace; in the latest flash PMI report, the index rose to above the 50 point market. If in the upcoming report the PMI will keep rising, it could signal growth in China’s economic development;
Currencies / Precious Metals– August Update
On Thursday, the Euro/ USD currency pair decreased by 0.73% to 1.3241. During the month, so far, the Euro/USD slightly fell by 0.46%. Further, other currencies such as the Aussie dollar also depreciated yesterday against the U.S dollar by 0.12%. The correlations among gold, Euro and Aussie dollar slightly weakened in the past several weeks, e.g. the correlation between the Eur/USD and gold price is 0.30 during August.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
07:00 – German Retail Sale
08:00 – KOF Economic Barometer
10:00 – EU CPI Flash Estimate
10:00 – EU Unemployment Rate
13:30 – Canada’s GDP by Industry
13:30 – U.S Personal spending
14:55 – UoM Consumer Sentiment
02:00 – China Manufacturing PMI
For further reading: