Precious metals resumed their downward trend and fell during yesterday. The fall of gold and silver prices coincided with the drop of leading “risk related currencies” such as the Euro and Aussie dollar against the USD. In the equities markets the S&P500 index and other leading indexes rallied. Will gold and silver continue to trade down today? On today’s agenda: Great Britain Claimant Count Change, Bank of England Inflation Report, EU GDP for the quarter, Governor King speaks, Canada Manufacturing Sales, U.S. Producer Price Index, and U.S. TIC Long Term Purchases.
Here is a short outlook for precious metals for Wednesday, May 15th:
Precious Metals – May Update
On Tuesday, gold declined by 0.68% to $1,424.5; Silver also fell by 1.33% to $23.37. During the May, gold declined by 3.24%; silver, by 3.23%.
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 haven’t performed well during the month.
The slow movement of both bullion prices is represented in the drop in precious metals prices’ volatility during the month: the standard deviations of gold and silver (daily percent changes) reached 1.27% and 1.46%, respectively.
Great Britain Claimant Count Change: as of last month’s report this figure had declined by 7k; the rate of unemployment inched up to 7.9% in the recent report;
Bank of England Inflation Report: this report will show the yearly rate of GB’s inflation based on the estimate of Bank of England for the next two years;
EU First Quarter GDP 2013: during the fourth quarter of 2012, EU’s economy contracted by 0.6%; if the EU economy will continue to shrink this could adversely affect the Euro;
Governor King speaks: Bank of England’s Governor will hold a press conference about the Bank’s inflation report; he may also offer talk about the upcoming MPC monetary policy meeting; this speech may influence British Pound traders;
Canada Manufacturing Sales: This report will refer to the manufacturing sales in Canada as of March. It may affect the USD/CAD currencies pair, which is strongly correlated with bullion prices. In the latest report regarding February 2013, manufacturing sales sharply rose by 2.6%;
U.S. Producer Price Index: In the previous report regarding March, this index for finished goods declined by 0.6% compared with February’s rate and by 1.1% in the past 12 months; this news might affect the direction of commodities rates;
U.S. TIC Long Term Purchases: The Treasury International Capital monthly report will show the shifts in the purchases and sales of US long term treasuries for March 2013. In the recent report regarding February 2013, the net foreign sales of U.S Treasuries longer-term notes fell by $17.8 billion;
Currencies / Bullion Market – May Update
The Euro/ USD slipped on Tuesday by 0.42% to 1.2920. During the month, the Euro/USD decreased by 1.88%. Moreover, other currencies such as the Canadian dollar and Aussie dollar also depreciated yesterday against the U.S dollar by 0.73% and 0.63%, respectively. The correlations among gold, Canadian dollar and Aussie dollar weakened: during May the linear correlation between gold and USD/CAD reached -0.25 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.44 (daily percent changes). If these correlations will strengthen, the direction of the Aussie, Canadian dollar and Euro are likely to partly determine the path of bullion prices.
Current Gold and Silver Rates as of May 15th
Gold (short term delivery) is traded at $1,413.1 per t oz. an $11.4 or 0.80% decrease as of 08:38*.
Silver (short term delivery) is at $23.07 per t oz – a 1.34% 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):
09:30 – Great Britain Claimant Count Change
Tentative – Bank of England Inflation Report
10:00 –EU First Quarter GDP 2013
10:30 – Governor King speaks
13:30 – Canada Manufacturing Sales
13:30 – U.S. Producer Price Index
14:00 – U.S. TIC Long Term Purchases
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
For further reading:
- Gold and Silver Outlook for May 13-17
- Weekly Outlook of Financial Markets for May 13-17
- Gold and Silver Outlook for May
- Gold and Silver Yearly Outlook For 2013
- Is the Golden Era of Gold Over?