Gold and silver tumbled down again during yesterday. Their plunge coincided with the devaluation of the Euro against the USD. Moreover, the ongoing recovery of the equities markets as seen with the rally of the S&P500 index and other indexes may have contributed to the decline in demand for precious metals. Yesterday, several U.S reports came out: PPI declined in April by 0.7% and the core PPI inched up by 0.1%; industrial production declined by 0.5%. These news items didn’t seem to curb the rally of stock markets. In Europe, Germany’s economy only grew by 0.1% in Q1 2013. This was lower than many had anticipated. This news may further pull down the Euro and commodities prices. In GB, Bank of England raised its growth forecast. Will gold and silver further fall today? On today’s agenda: Euro Area CPI, U.S. Housing Starts and Building Permits, U.S Core Consumer Price Index, U.S. Jobless Claims, and Philly Fed Manufacturing Index.
Here is a short outlook for precious metals for Thursday, May 16th:
Precious Metals – May Update
On Wednesday, gold tumbled down again by 1.99% to $1,396.2; Silver also plummeted by 3.05% to $22.65. During the May, gold declined by 5.16%; silver, by 6.18%.
In the chart below are the normalized prices of gold and silver for 2013 (normalized to 100 as of April 30th). The prices of gold and silver have declined in the past several weeks.
The ratio between the two precious metals increased again on Wednesday to 61.63. During the month, the ratio rose by 1.08% as gold outperformed silver.
On Today’s Agenda
Euro Area CPI: according to the latest update the annual CPI slipped again to 1.7%, which is slightly lower than ECB’s target inflation; if the inflation will continue to decline, it could raise the chances of ECB cutting again its cash rate in the near future;
U.S. Housing Starts: the U.S Census Bureau will come out with its U.S housing starts monthly report for April 2013; this report was historically correlated with gold price – as housing starts increase, gold prices tended to fall the next day (even when controlling to the U.S dollar effect); in the previous monthly report, the adjusted annual rate reached 1,036,000 in March 2013, which was 7% from February’s rate;
U.S. Building Permits: in the recent update, building permits fell during March by 3.9% (M-o-M) in the adjusted annual rate of building permits was 902,000. If building permits will continue to fall, it may indicate that the U.S housing market (from this aspect) isn’t recovering (the recent U.S building permits update);
U.S Core Consumer Price Index: Based on the U.S Bureau of Labor statistics during March, the CPI slipped by 0.2% (M-o-M); the core CPI edged up by 0.1%; the core index rose over the past twelve months by 1.5%.
U.S. Jobless Claims Weekly Report: in the recent report the jobless claims declined by 4k to reach 323k; this upcoming weekly report may affect the path of U.S dollar and consequently commodities and stocks markets;
Philly Fed Manufacturing Index: This monthly survey shows an estimate for the growth of the US manufacturing sectors. In the recent April survey, the growth rate slightly fell from 2.0 in March to 1.3 in April (the previous Philly Fed review);
Currencies / Bullion Market – May Update
The Euro/ USD declined again on Wednesday by 0.26% to 1.2887. During the month, the Euro/USD decreased by 2.13%. Conversely, other currencies such as the Canadian dollar and Aussie dollar slightly rallied yesterday against the U.S dollar by 0.09% and 0.23%, respectively. The correlations among gold, Canadian dollar and Aussie dollar are still mid-strong: during the past several weeks the linear correlation between gold and Euro/USD reached 0.35 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.62 (daily percent changes). If these correlations will hold, the Aussie, Canadian dollar and Euro are likely to partly affect bullion rates.
Current Gold and Silver Rates as of May 16th
Gold (short term delivery) is traded at $1,391.8 per t oz. a $4.4 or 0.32% decrease as of 08:38*.
Silver (short term delivery) is at $22.59 per t oz – a 0.32% decrease as of 08:38*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
10:00 – Euro Area CPI
13:30 – U.S. Housing Starts
13:30 – U.S. Building Permits
13:30 –U.S Core Consumer Price Index
13:30 – U.S. Jobless Claims
15:00 – Philly Fed Manufacturing Index
13:00 – Canada’s core CPI
14:55 – UoM Consumer Sentiment
15:00 – Bernanke’s Speech
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