The prices of gold and silver started off the week on a negative note and slipped on Tuesday. Moreover, the volume of trade also picked up after the markets were closed on Monday. Will gold and silver change direction again and rally? On today’s agenda: Japan’s rate decision and press conference, Great Britain Claimant Count Change, MPC Asset Purchase and Rate Votes, Bank of Canada’s Overnight Rate and Press Conference, Bank of Canada’s Monetary Policy Report, China Manufacturing PMI.
Here is a short overview for precious metals for Wednesday, January 22nd:
Gold and Silver – January Review
On Tuesday, gold declined by 0.81% to $1,241.8; Silver, by 2.12% to $19.85. During January, gold rose by 3.3%; silver, by 2.6%. In the chart below are the normalized rates of bullion for the past several weeks (normalized to 100 as of December 31st). The prices of gold and silver have slightly increased in recent weeks.
The ratio between the two precious metals rose on Tuesday to 62.56. During January, the ratio edged up by 0.67% as silver has moderately under-performed gold.
The gold and silver futures volumes of trade have increased and reached on Tuesday 204 thousand and 50 thousand, respectively =- the highest level in recent weeks. The volume of trade is likely to remain high for the rest of the week. The chart below shows the changes in the volume of trade in the past several weeks.
On Today’s Agenda
Japan’s rate decision and press conference: In the upcoming Japanese monetary policy meeting, BOJ members will announce of any changes to the bank’s current asset purchase program. This decision may affect the Japanese yen;
Great Britain Claimant Count Change: As of last month, the number of unemployed in GB fell again by 36.7k; the rate of unemployment edged down to 7.4%;
MPC Asset Purchase and Rate Votes: In the past MPC meeting, the Bank kept 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;
Bank of Canada’s Overnight Rate and Press Conference: The Bank of Canada will decide on its overnight rate decision – the rate is currently set at 1%. The BOC may leave its policy unchanged and maintain its interest rate at its current level; the economic developments in Canada might prompt BOC to eventually reduce its cash rate;
Bank of Canada’s Monetary Policy Report: The Bank of Canada will publish its quarterly monetary policy report and will also have a press conference; if the Bank presents any shifts in this press conference; it could affect the Canadian dollar;
China Manufacturing PMI (flash): HSBC will publish its flash manufacturing PMI survey for January. Last month’s report regarding December 2013 the Manufacturing PMI inched up to 50.5 – i.e. China’s manufacturing sectors is growing but at a slightly slower pace;
Currencies / Precious Metals Correlations – January Update
On Tuesday, the Eur/USD currency pair inched up by 0.07% to 1.3561. During January, the Eur/USD decreased by 1.32%. Conversely, other currencies such as the Japanese yen and Aussie dollar slightly depreciated yesterday against the U.S dollar by 0.12% and 0.06%, 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 0.25 during December/January. This could suggest the shifts 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
Tentative – Japan’s rate decision and press conference
09:30 – Great Britain Claimant Count Change
09:30 –MPC Asset Purchase and Rate Votes
15:00 – Bank of Canada’s Overnight Rate and Press Conference
15:00 – Bank of Canada’s Monetary Policy Report
02:45 – China Manufacturing PMI
Tomorrow
09:00 – Flash German, French and Euro Zone Manufacturing PMI
09:00 – Euro Area Current Account
13:30 – Canada Core Retail Sales
13:30 – U.S. Jobless Claims Weekly Report
14:00 –U.S flash manufacturing PMI
15:00 – U.S. Existing Home Sales
For further reading: