The prices of gold and silver changed course and slowly declined in the past couple of days. Their recent fall coincided with the depreciation of several leading currencies such as Euro and Aussie dollar against the US dollar. In the U.S the PPI rose during December by 0.4% and the PPI sans food and energy increased by 0.3% — the highest single month gain the past year. Is the U.S inflation starts to pick up? Retails sales inched up by 0.2% during December (m-o-m) and by 4% from last year. This moderate gain in retail sales didn’t stop from the recovery of the U.S dollar and equities markets. On today’s agenda: German Final CPI, U.S Core Consumer Price Index, U.S. Jobless Claims, U.S. TIC Long Term Purchases, Philly Fed Manufacturing Index, and Bernanke’s Speech.
Here is a short overview for precious metals for Thursday, January 16th:
Gold and Silver – January Review
On Wednesday, gold slightly declined by 0.57% to $1,238.3; Silver, by 0.73% to $20.11. During January, gold rose by 3%; silver, by 4%. In the chart below are the normalized prices of bullion for the past several weeks (normalized to 100 as of December 31st). The prices of gold and silver have slightly rose in recent weeks.
The ratio between the two precious metals rose on Wednesday to 61.57. During January, the ratio slipped by 0.97% as silver has moderately out-performed gold.
The gold and silver futures volumes of trade have decreased and reached on Wednesday 118 thousand and 32 thousand, respectively. The volume of trade is likely to remain low for the rest of the week. The chart below shows the developments in the volume of trade in the past several weeks.
On Today’s Agenda
German Final CPI: Based on the recent report, the CPI slightly rose by 0.2% during November, and the current annual rate is 1.3%. The changes in Germany’s inflation could affect ECB’s monetary policy;
U.S Core Consumer Price Index: This monthly report refers to the main shifts in the core consumer price index for December 2013. Based on the U.S Bureau of Labor statistics, during November, the CPI remained flat; the core CPI inched up again by 0.2%; this report could affect the USD and may also affect the FOMC’s monetary policy;
U.S. Jobless Claims Weekly Report: This weekly report will refer to the changes in the initial jobless claims for the week ending on January 10th; in the latest report the jobless claims fell again by 15k to reach 330k; the next weekly report may affect the U.S dollar;
U.S. TIC Long Term Purchases: The Treasury International Capital monthly update will show the changes the purchases and sales of US long term treasuries for November 2013. In the recent report regarding October 2013, the net foreign sales of U.S Treasuries longer-term notes reached a surplus of $35.4 billion;
Philly Fed Manufacturing Index: This monthly survey estimates the growth of the US manufacturing sectors. In the previous survey regarding December, the growth rate slightly rose from +7 in November to +7 in December. If the index further declines, it may adversely affect not only U.S Dollar but also U.S equity markets and commodities (the recent Philly Fed review);
Bernanke’s Speech: The exiting Chairman of the Federal Reserve is expected to give a speech titled “The Fed Yesterday, Today, and Tomorrow” at the Brookings Institution, in WashingtonDC;
Currencies / Precious Metals Correlations – January Update
On Wednesday, the Eur/USD currency pair slipped by 0.54% to 1.3671. During January, the Eur/USD decreased by 1%. Moreover, other currencies such as the Japanese yen and Aussie dollar also depreciated yesterday against the U.S dollar by 0.33% and 0.57%, respectively. The correlations among gold, silver and Aussie have slightly strengthened in recent days, e.g. the correlation between the AUD/USD and gold price is only 0.29 during December/January. This could suggest the changes of the gold and silver prices have little to do with the changes in the forex market.
Here is a reminder of the main events and publications that are scheduled for today and tomorrow (all times GMT):
Today
07:00 – German Final CPI
13:30 – U.S Core Consumer Price Index
13:30 – U.S. Jobless Claims
14:00 – U.S. TIC Long Term Purchases
15:00 – Philly Fed Manufacturing Index
16:10 –Bernanke’s Speech
Tomorrow
09:30 – Great Britain Retail Sales
13:30 – U.S. Housing Starts
13:30 – U.S. Building Permits
14:15 –U.S Industrial Production
14:55 – UoM Consumer Sentiment
For further reading: