Precious metals along with other commodities such as crude oil continue their recovery from last week’s tumble. This correction might hint that the upcoming U.S GDP report that will be published today might not be positive and could even show a contraction in the GDP. This news is likely to help rally the prices of gold and silver and at the same time pull down equity markets. The U.S durable goods report was very negative any have contributed to the rally of precious metals. Yesterday, it was reported that jobless claims slightly declined by 16k to reach 339k – a slight fall compared to last week. But the main issue continues to be a correction to the sharp drop in gold and silver in recent weeks. Despite the recent recovery, both precious metals are still negative for this month. Another big news item that could stir up the markets (and did so in the past) is the upcoming BOJ rate decision and monetary policy statement that could affect not only the Japanese yen but also commodities prices – especially if BOJ will surprise again in its statement. Will gold and silver change direction and fall? On today’s agenda: Bank of Japan rate decision (update: BOJ left policy unchanged; the Japanese yen is rising), outlook and statement U.S GDP for Q1 2013 (update: GDP grew by 2.5% – lower than expected), Euro Area Monetary Development, SNB Chairman Jordan’s Speech, and KOF Economic Barometer.
Here is a short outlook for precious metals for Friday, April 26th:
Precious Metals – April Update
On Thursday, the price of gold spiked by 2.69% to $1,461; Silver also sharply rose by 5.72% to $24.14. During the month, gold declined by 8.34%; silver, by 14.68%.
In the chart below are the normalized rates of gold and silver for 2013 (normalized to 100 as of March 28th). The prices of precious metals rallied in recent days.
First U.S GDP 1Q 2013 Estimate: This will be the first estimate of U.S’s first quarter 2013 real GDP growth. In the latest estimate the U.S GDP edged up by 0.4% in the fourth quarter; in the third quarter the GDP grew by 2.7%; in the 2Q2012 the GDP growth rate was 1.7% (annual rate). If the growth rate from fourth quarter of 2012 to the first quarter of 2013 will fall to a lower than expected figure, this could affect precious metals.
Tentative – Bank of Japan – Rate Decision, Outlook and Monetary Policy Statement: Bank of Japan will come out with its interest rate decision, monetary policy for May and its outlook on the economy. Following the Bank’s decision to double its inflation target and augment its asset purchase program the Japanese yen tumbled down against the USD and Euro. Will the BOJ surprise again? In the latest G20 Meeting didn’t lead to any big statement. So at least Japan is still off the hook on its monetary easing plan. If the Bank will surprise and change its current monetary policy or its outlook for Japanese economy, this might pull the Japanese yen even further down;
KOF Economic Barometer: this report provides an estimate to the Swiss economy in the months to come;
SNB Chairman Jordan’s Speech: the Swiss National Bank Chairman will publicly speak; if he will announce or imply of any shifts to the monetary policy of the SNB it could affect the Swiss Franc;
Euro Area Monetary Development: In the previous February report, the annual growth rate for M3 fell to 3.1%; M1 increased to 7.0%. Finally, the annual growth rate of loans to private sector reached -0.4%. This news suggests the EU economy isn’t growing much;
Currencies / Bullion Market – April Update
The Euro/ USD edged down on Thursday by 0.03% to 1.3011. During April, the Euro/USD rose by 1.52%. Conversely, other currencies such as the Aussie dollar and Canadian dollar also slightly appreciated yesterday against the U.S dollar by 0.13% and 0.57%, respectively. The appreciation of several currencies against the U.S dollar may have slightly contributed to the rally of gold and silver. The correlations among gold, silver, Canadian dollar and Aussie dollar remained robust as indicated in the chart below: During April, the linear correlation between gold and USD/CAD was -0.71 (daily percent changes); the linear correlation between the silver and AUD/USD was 0.69 (daily percent changes). If these relations will remain strong, the changes in precious metals rates might coincide with the in the shifts in foreign exchange markets.
Current Gold and Silver Rates as of April 26th
Gold (short term delivery) is traded at $1,482.2 per t oz. a $20.20 or 1.38% increase as of 03:07*.
Silver (short term delivery) is at $24.67 per t oz – a 2.00% increase as of 03:07*.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
Tentative – Bank of Japan – Rate Decision, Outlook and Monetary Policy Statement
08:00 – KOF Economic Barometer
09:00 – SNB Chairman Jordan’s Speech
09:00 – Euro Area Monetary Development
13:30 – First U.S GDP 1Q 2013 Estimate
For further reading: