Gold and silver didn’t do much yesterday as the price of gold slightly rose while silver moderately declined. Moreover, in the forex and equity markets the volatility was also low. In the recent precious metals weekly outlook I have pointed out that one of the main events of the week will be Bernanke’s speech that will take place by the end of the week. Until then, the volatility of precious metals might remain low. On today’s agenda: Reserve Bank of Australia rate decision, Australian Trade Balance, German Factory Orders, Swiss National Bank Foreign Currency Reserve.
Here is a short outlook for precious metals for Tuesday, May 7th:
Precious Metals – May Update
On Monday, the price of gold slightly rose by 0.26% to $1,468; Silver slipped by 0.24% to $23.94. During the month, gold declined by 0.29%; silver, by 0.86%.
In the chart below are the normalized rates of gold and silver for 2013 (normalized to 100 as of April 11th). The prices of gold and silver have slowly rallied in the past several weeks.
The ratio between the two precious metals slightly rose on Monday to 61.33. During May, the ratio edged up by 0.58% as gold slightly out-performed silver.
The gold and silver futures volumes of trade have declined on Monday to 87 thousand and 24 thousand, respectively. These numbers are lower than the volume traded in the past several weeks. If the volume will remain low today, this could suggest the volatility in the prices of gold and silver won’t rise. The chart below presents the volume of trading gold and silver futures in the CME in recent weeks.
On Today’s Agenda
German Factory Orders: This report will refer to the changes in the factory orders of Germany for March; in the last report the German factory orders increased by 2.3% (M-o-M);
Australian Trade Balance: The report will pertain to March 2013. In the previous monthly report, regarding February, the seasonally adjusted balance of goods and services contracted its deficit to $178 million. The export of non-monetary gold fell by $143 million; if the gold exports will continue to dwindle in March, it might suggest a drop in demand for non-monetary gold (see here recent report);
Reserve Bank of Australia – Cash Rate Statement: in the past several months, the overnight money market rate of Australia’s Reserve Bank remained flat at 3%, which is still the lowest level since the September 2009. RBA cut the rate four times in 2012 by a total of 1.25pp. If the RBA will decide to reduce its rate again, this news may affect the Australian dollar;
Swiss National Bank Foreign Currency Reserve: The Bank will come out with its Foreign Currency Reserve; based on the recent report, the forex reserves rose compared to last month;
Currencies / Bullion Market – May Update
The Euro/ USD slipped on Monday by 0.29% to 1.3076. During May, the Euro/USD declined by 0.70%. Moreover, other currencies such as the Japanese yen and Aussie dollar also slightly depreciated yesterday against the U.S dollar by 0.33% and 0.63%, respectively. The depreciation of these currencies against the U.S dollar may have partly contributed to the slight decline of gold and silver during the past several days. The correlations among gold, Canadian dollar and Aussie dollar remained strong: during April/May the linear correlation between gold and USD/CAD was -0.68 (daily percent changes); the linear correlation between the gold and AUD/USD reached 0.60 (daily percent changes). These correlations suggest the recent fall of precious metals prices was partly related to the developments in the foreign exchange markets.
Current Gold and Silver Rates as of May 7th
Gold (short term delivery) is traded at $1,461.9 per t oz. a $6.1 or 0.42% decrease as of 08:07*.
Silver (short term delivery) is at $23.62 per t oz – a 1.40% decrease as of 08:07*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
02:30 – Australian Trade Balance
05:30 – Reserve Bank of Australia – Cash Rate Statement
08:00 – Swiss National Bank Foreign Currency Reserve
11:00– German Factory Orders
Tentative –China’s Trade Balance
Tentative – U.S 10 Year Bond Auction
15:30 – U.S Crude Oil Stockpiles Weekly Update
Tentative – China’s CPI
For further reading: