Gold and silver fell for the third consecutive day. The lingering effect of the recent FOMC decision to keep policy unchanged and ECB’s decision to leave interest rate unchanged may have contributed to the decline of not only the Euro, but also commodities prices such as gold and oil. U.S jobless claims rose by 8k to reach 365k. Currently gold and silver are falling. On today’s agenda: U.S non-farm payroll report and ISM Non-Manufacturing PMI.
Here is a short outlook for precious metals for Friday, August 3rd:
Precious Metals –August Update
Gold decreased on Thursday by 1.03% to $1,590.7; Silver also fell by 1.96% to $27. During the week, gold fell by 1.97%; silver, by 1.83%.
As seen, the chart below presents the normalized prices of precious metals in recent weeks (normalized to 100 as of July 16th). As you can see, despite the recent drop in bullion rates, they have both nearly haven’t declined in the past few weeks.
The ratio between the two precious metals rose on Thursday to 58.37. During the week the ratio edged down by 1.08% as gold slightly under-performed silver.
FOMC’s Decision Still Had a Lingering Effect on Bullion
Following the FOMC decision to keep policy unchanged, the recent decline in bullion rates may have also been affected by this decision. The table below shows the changes in bullion rates during the day of release of the statement and the following day.
On Today’s Agenda
U.S. Non-Farm Payroll Report: according the ADP the non-farm labor expanded by 163k. If the labor report will present a close figure, this could help rally the market. In June the number of non-farm payroll employment rose by only 80k; the U.S unemployment rate remained 8.2%; I suspect if the upcoming report will continue to show low growth of below 100 thousand (in additional jobs), this may raise the chances of the Fed introducing additional stimulus plan in 2012; this report might affect not only the U.S dollar, but also bullion prices (see here my last review on the U.S employment report).
U.S. ISM Non-Manufacturing PMI: During June 2012 this index edged down to 52.1% – this still means the non-manufacturing is expanding and at a slightly slower pace than before;
Currencies / Gold & Silver Market –August Update
The Euro/US Dollar declined again on Thursday by 0.37% to 1.218. The non-action of ECB President in which he didn’t announce any change in the ECB Policy may have contributed to the fall of the Euro. During the week (UTD) the Euro/USD decreased by 1.16%. On the other hand, other currencies including AUD appreciated on Thursday against the USD by 0.04%. The correlations between gold and the above-mentioned rates remain strong: during the month, the correlation between the gold and EURO/USD reached 0.71 (daily percent changes); the correlation between silver and EURO /USD, 0.67. Thus, if the Euro and AUD will change direction and rise, they may pull up precious metals rates. Currently, the Euro/USD is increasing.
Current Gold and Silver Rates as of August 3rd
Gold (September 2012 delivery) is traded at $1,594 per t oz. a $3.3 or 0.21% increase as of 08:26*.
Silver (September 2012 delivery) is at $27.145 per t oz – a $0.15 or 0.56% increase as of 08:26*.
Daily Outlook for August 3rd
Gold and silver declined for the third straight day but they may change direction during the day. The upcoming Labor report could affect the bullion market in the same direction as the stocks and commodities markets. If the report will be positive and increase by more than 120k this could positively affect the market. Finally, if the Euro and other “risk currencies” will change direction and rally, this could also pull up precious metals rates.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
13:30 – U.S. Non-Farm Payroll Report
15:00 – U.S. ISM Non-Manufacturing PMI
For further reading: