Gold started off the week the same way it has ended the previous one, edging up. Silver rose by a larger rate than gold did. Today, the FOMC will start a two day meeting; tomorrow the FOMC will publish a statement. The Euro changed direction and declined yesterday. The market still waits for the next step of ECB and will it bailout Spain, Italy and Greece. Currently gold and silver are rising. On today’s agenda: U.S Consumer Confidence, China’s Manufacturing PMI, Euro Area inflation rate, EU unemployment rate, Canada’s GDP report, and German retail sales.
Here is a short outlook for precious metals for Tuesday, July 31st:
Precious Metals – July Update
Gold edged up again on Monday by 0.08% to $1,624.0; Silver also rose by 1.95% to $28.03. During July, gold rose by 1.23%; silver, by 1.52%.
In the chart bellow are the normalized rates of these precious metals during the past several weeks (normalized to 100 as of June 29th). As you can see, during the last several weeks gold and silver didn’t move much.
The ratio between the two precious metals declined on Monday to 57.93. During July the ratio edged down by 0.29% as gold slightly under-performed silver.
On Today’s Agenda
U.S Consumer Confidence: according to the previous report, the consumer confidence index fell in June (M-o-M). The current expectations are that the recent index may decline again;
German Retail Sales: In June, retail sales decreased by 0.3%; if this report will continue to be negative then it might weaken the Euro;
Euro Area Annual Inflation: the inflation in Euro Area reached 2.4% in June. If the upcoming inflation rate estimate will change direction and rise, it may lower the chances of ECB cutting its interest rate;
Euro Area unemployment rate: the rate of unemployment of the Euro Area reached 11.1% in May. This mean there wasn’t any significant change in the unemployment. If in the upcoming report there will be, it could affect the Euro;
Canada’s GDP by Industry: In the previous report regarding April, the real GDP rose by 0.3%. This report may affect the strength of the Canadian currency which is strongly correlated with bullion rates;
China Manufacturing PMI: according to the previous Manufacturing PMI for regarding June the Manufacturing PMI slipped to 50.2; this index indicates the developments in China’s manufacturing sectors; if this downward trend will continue, this may adversely affect precious metals prices;
Currencies / Gold & Silver Market – July Update
The Euro/US Dollar declined on Monday by 0.51% to 1.226. During the month (UTD) the Euro/USD decreased by 3.21%. Alternatively, other currencies including AUD and CAD appreciated on Monday against the USD by 0.19% and 0.16%, respectively. The correlations between gold and the above-mentioned rates remain high: during the month, the correlation between the gold and EURO/USD reached 0.67 (daily percent changes); the relation between gold and AUD /USD, 0.53. Therefore, if the Euro and AUD will fall, they may also drag down precious metals rates. Currently, the Euro/USD is rising.
Current Gold and Silver Rates as of July 31st
Gold (August 2012 delivery) is traded at $1,626.3 per t oz. a $2.3 or 0.14% increase as of 08:06*.
Silver (August 2012 delivery) is at $28.145 per t oz – a $0.112 or 0.4% increase as of 08:08*.
Daily Outlook for July 31st
Gold and silver started off the week rising but this rally might change direction if the Euro and other “risk currencies” will trade down. The FOMC meeting will conclude tomorrow and until then there might be renewed speculation of the future steps of the Fed which could keep pressuring bullion rates up. The volatility might continue to be low until after the FOMC meeting, the ECB and MPC rate decisions and the U.S labor report. The upcoming American and Chinese reports could affect not only the USD but also bullion rates. If the Chinese PMI index will decline, it could pressure down commodities rates.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
07:00 – German Retail Sales
10:00 – Euro Area Flash Estimate of Annual Inflation
10:00 – Euro Area unemployment rate
13:30 – Canada’s GDP by Industry
15:00 – U.S Consumer Confidence
2:00– China Manufacturing PMI
09:30 – GB Manufacturing PMI
13:15 – ADP estimate of U.S. non-farm payroll
14:00 – Spanish Flash Manufacturing PMI
15:00 – U.S. ISM Manufacturing
19:30 – FOMC Meeting (Statement)
2:30 – Australian Trade Balance
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