Precious metals continued to trade down following the recent testimony of Bernanke and the publication of the minutes of the May FOMC meeting. The speculations around the Fed’s potential tapering of the QE3 program may have contributed to the fall of precious metals and other commodities markets. The equity markets in the U.S also tumbled down. Currently, the Japanese yen is tumbling down against the Euro and USD on account of the fall in the Japanese equity markets. The British GDP growth rate remained 0.3% in the first quarter of 2013. On today’s agenda: Flash German, French and Euro Zone Manufacturing PMI, U.S. Jobless Claims, U.S. New Home Sales, ECB President Speaks and Kuroda’s Speech.
Here is a short outlook for precious metals for Thursday, May 23rd:
Precious Metals – May Update
On Wednesday, the price of gold fell again by 0.74% to $1,367.4; Silver edged up by 0.07% to $22.46. During May, gold tumbled down by 7.12%; silver, by 6.98%.
In the chart below are the normalized rates 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 fell on Wednesday to 60.88. During the month, the ratio edged down by 0.15% as gold slightly under-performed silver.
Flash German, French and Euro Zone Manufacturing PMI: In the latest monthly report regarding April 2013, the German PMI declined again to 47.9 i.e. the manufacturing conditions are shrinking at a faster pace. This report serves as an indicator to the economic changes of the Euro Area’s leading economies’ manufacturing conditions;
U.S. Jobless Claims Weekly Report: in the previous report the jobless claims rose by 32k to reach 360k; this forthcoming weekly report may affect the path of U.S dollar and consequently commodities and stocks markets;
U.S. New Home Sales: This report will pertain to April 2013; in the recent report (opens pdf; for March), the sales of new homes slightly rose to an annual rate of 417,000 – a 1.4% gain (month over month); if the number of home sales will continue to rise, it may indicate a sign of a recovery in the U.S real estate market, which may also affect the USD;
ECB President Speaks: Mario Draghi will give a speech at an event organized by Lord Mayor, in London; the title of the speech is “The Future of Europe in the Global Economy”. If Draghi will provide some insight behind the future steps of the ECB’s monetary policy, this speech could affect the Euro;
Kuroda’s Speech: Bank of Japan Governor will give a speech at the “Asia’s Search for Steps towards Stronger Ties and Integration” conference, in Tokyo;
Currencies / Bullion Market – May Update
The Euro/ USD slightly fell on Wednesday by 0.36% to 1.2860. During May, the Euro/USD decreased by 2.34%. Moreover, other currencies such as the Aussie dollar also declined yesterday against the U.S dollar by 1.06%. The depreciation of these currencies against the U.S dollar may have contributed to the recent fall of gold and silver yesterday. The correlations among gold, Euro and Aussie dollar remained strong and robust: during April and May the linear correlation between gold and Euro/USD reached 0.40 (daily percent shifts); the linear correlation between the gold and AUD/USD was 0.54 (daily percent shifts). If these correlations will hold up, the path of the Aussie, Canadian dollar and Euro are likely to partly affect precious metals.
Current Gold and Silver Rates as of May 23rd
Gold (short term delivery) is traded at $1,377.7 per t oz. a $10.3 or 0.75% increase as of 09:22*.
Silver (short term delivery) is at $22.26 per t oz – a 0.94% decrease as of 09:22*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:00 – Flash German, French and Euro Zone Manufacturing PMI
09:30 – Second GB GDP Q1 2013
13:30 – U.S. Jobless Claims
15:00 – U.S. New Home Sales
20:30 – ECB President Speaks
03:55 – Kuroda’s Speech
09:00 – German Business Climate Survey
13:30 – U.S Core Durable Goods
For further reading:
- Gold and Silver Outlook for May 20-24
- Weekly Outlook of Financial Markets for May 20-24
- Will Gold Recover from its Recent Fall?
- Gold and Silver Outlook for May
- Gold and Silver Yearly Outlook For 2013
- Is the Golden Era of Gold Over?