Gold and silver continued to trade up for the second consecutive day; the recent rise in bullion prices coincided with the rally of other commodities rates and stock indexes. Bernanke didn’t offer any insight as to the future steps of the FOMC in his recent speech. Today Bernanke will give another speech. Other items of today’s agenda include: RBA’s interest rate decision and GB’s manufacturing production.
Here is a short outlook for precious metals for Tuesday, August 7th:
Precious Metals –August Update
Gold rose again on Monday by 0.43% to $1,616.2; Silver also edged up by 0.22% to $27.86. During the month, gold edged up by 0.1 %; silver slipped by 0.18%.
As seen, the chart presents the changes of normalized rates of precious metals in the last few weeks (normalized to 100 as of July 16th). As seen, during recent weeks gold and silver demonstrated an unclear trend.
The ratio between the two precious metals rose on Monday to 58.01. During August the ratio edged up by 0.28% as gold slightly out-performed silver.
On Today’s Agenda
RBA – Cash Rate Statement: the overnight money market interest rate of Australia’s Reserve Bank remained unchanged at 3.5% – the lowest level since the end of 2009. If the RBA will decide to cut its rate again this news may affect the Aussie dollar that is strongly linked with bullion prices;
Great Britain Manufacturing Production: this report will show the yearly rate of GB’s manufacturing production for June; in the last report regarding April the index rose by 1.2% (M-2-M);
Bernanke’s Speech: The Chairman of the Federal Reserve will talk about Financial Education;
Currencies / Bullion Market –August Update
The Euro/ USD edged up on Monday by 0.11% to 1.2401. During August (UTD) the Euro/USD rose by 0.79%. Further, other currencies including and CAD also appreciated on Monday against the USD by 0.11%. The linear relation between gold and the Euro remains robust: during the past month, the correlation between the gold and EURO/USD was 0.728 (daily percent changes). Thus, if the Euro will change direction and fall, it could also pull down precious metals. Currently, the Euro/USD is falling.
Current Gold and Silver Rates as of August 7th
Gold (September 2012 delivery) is traded at $1,613.8 per t oz. a $2.4 or 0.15% decrease as of 00:13*.
Silver (September 2012 delivery) is at $27.82 per t oz – a $0.043 or 0.15% decrease as of 23:56*.
Daily Outlook for August 7th
Gold and silver rose for the second consecutive day but this rally might be at jeopardy if the Euro and other “risk currencies” will change direction and trade down against the USD. The upcoming rate decision of RBA could affect not only the Aussie dollar, but also precious metals rates. If the upcoming reports that will come out including Great Britain Manufacturing Production will show little growth, it could adversely affect the GB Pound which could also affect other currencies and commodities rates.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
05:30 – Reserve Bank of Australia – Cash Rate Statement
09:30 – Great Britain Manufacturing Production
19:30 – Bernanke’s Speech
10:30 – Great Britain Inflation Report
15:30 – U.S Crude Oil Stockpiles Report
18:00 – U.S 10 Year Bond Auction
Tentative – German 10 Year Bond Auction
02:30 – Australia Employment Report
02:30 – Chinese CPI
Tentative – BOJ –Monetary Policy Statement
For further reading: