The prices of gold and silver bounced back on Wednesday after they had declined a day earlier. Their recent rally coincided with the recovery of other commodities prices such as oil. U.S durable goods report came out yesterday: the report was disappointing as durable goods orders fell by 5.7%; core durable good declined by 1.4%. This report didn’t seem to curb the rally of commodities and didn’t drag down equity markets. Moreover, this news may have helped pull up precious metals rates. Perhaps investors wait for tomorrow’s U.S GDP report that could stir up the market again if there will be a surprise. In the meantime, will gold and silver continue to trade up? Currently, both gold and silver are sharply up. This represents an ongoing correction to last week’s tumble. I don’t think up to now there were any news items or fundamental shift that could explain this rally. On today’s agenda: Flash GB GDP Q1 2013 and U.S. Jobless Claims.
Here is a short outlook for precious metals for Thursday, April 25th:
Precious Metals – April Update
On Wednesday, the price of gold bounced back and rose by 1.05% to $1,423; Silver also increased by 0.07% to $22.83. During the month, gold declined by 10.74%; silver, by 19.30% – currently the worst performing month for both metals in years.
In the chart below are the normalized prices of gold and silver for 2013 (normalized to 100 as of March 28th). The prices of precious metals haven’t performed well during April.
The ratio between the two precious metals sharply rose again on Wednesday to 62.34. During the month, the ratio rose by 10.60% as gold out-performed silver.
The gold and silver futures volumes of trade have declined in the past several days. They reached by Wednesday 153 thousand and 107 thousand for gold and silver, respectively. These numbers are lower than the volume traded a couple of weeks back. If the volume will pick up today, this could raise the odds of high volatility in the prices of gold and silver. The chart below presents the volume of trading gold and silver futures in the CME during April.
St. Deviation of Gold and Silver
Despite the slowdown in the high volatility of precious metals compared to previous week, the volatility of precious metals prices are still higher than in previous months: The standard deviations of gold and silver (daily percent changes) reached in April 2.64% and 3.09%, respectively.
On Today’s Agenda
Flash GB GDP Q1 2013: This report will present the first estimate of the quarterly growth rate of the British economy for the first quarter of 2013; during the fourth quarter the GB economy contracted by 0.3% (Q-2-Q);
U.S. Jobless Claims Weekly Report: Update: jobless claims fell by 16k and reached 339k. In the previous report the jobless claims rose by 4k to reach 348k; this upcoming weekly report may affect the direction of U.S dollar and consequently precious metals, forex and stocks markets;
Currencies / Bullion Market – April Update
The Euro/ USD also changed course and slightly increased on Wednesday by 0.15% to 1.3015. During April, the Euro/USD rose by 1.55%. Moreover, other currencies such as the Aussie dollar and Canadian dollar also slightly appreciated yesterday against the U.S dollar by 0.19% and 0.01%, respectively. The appreciation of leading currencies against the U.S dollar may have moderately contributed to the rally of gold and silver. The correlations among gold, silver, Euro and Aussie dollar remained robust as indicated in the chart below: During April, the linear correlation between gold and Euro/USD was 0.25 (daily percent changes); the linear correlation between the silver and AUD/USD was 0.63 (daily percent changes). If these correlations will remain robust, the changes in precious metals rates might coincide with the in the developments in foreign exchange markets.
Current Gold and Silver Rates as of April 25th
Gold (short term delivery) is traded at $1,446.8 per t oz. a $22.2 or 1.56% increase as of 05:53*.
Silver (short term delivery) is at $23.40 per t oz – a 2.11% increase as of 05:53*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:30 – Flash GB GDP Q1 2013
13:30 – U.S. Jobless Claims Weekly Report
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
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