The price of gold changed direction and edged down on Tuesday after it had increased during the previous days. Silver, on the other hand, continued to trade up. The Euro an many other risk currencies depreciated against the USD. Currently, gold and silver prices are falling. On today’s agenda: Great Britain Inflation Report, American and German 10 year bond auctions, Australia Employment Report, Chinese CPI, BOJ’s Monetary Policy Statement.
Here is a short outlook for precious metals for Wednesday, August 8th:
Precious Metals –August Update
Gold declined on Tuesday by 0.21% to $1,612.8; Silver rose by 0.8% to $28.09. During the month, gold edged down by 0.11 %; silver rose by 0.62%.
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 didn’t break from their respective range.
The ratio between the two precious metals fell on Tuesday to 57.42. During August the ratio edged down by 0.72% as gold slightly under-performed silver.
On Today’s Agenda
Great Britain Inflation Report: BOE will issue its quarterly report on the inflation in Great Britain. This news may influence British pound traders;
U.S 10 Year Bond Auction: the U.S government will issue another bond auction; in the previous bond auction, which was held at the second week of July, the rate was 1.46%;
German 10 Year Bond Auction: in the latent bond auction, which was held at the middle of July, the rate was 1.31%;
Australia Employment Report: in the previous June report the rate of unemployment edged up to 5.2%; the number of employed decreased by 27,000 people; the number of unemployed increased by 7,200 during June compared with May‘s numbers. This report could affect the Australian dollar (see here the recent report);
Chinese CPI: during June the Chinese inflation rate declined to an annual rate of 2.2%; this rate is below China’s inflation target of 4% in annual terms. If the inflation will continue to dwindle it could indicate that China’s economic progress continues to slow down;
Bank of Japan –Monetary Policy Statement: Up to now, BOJ kept the interest rate unchanged at 0 to 0.1 percent. If the BOJ will introduce a new monetary stimulus plan, it might affect the Yen and commodities rates;
Currencies / Bullion Market –August Update
The Euro/ USD edged down on Tuesday by 0.02% to 1.2399. During August (UTD) the Euro/USD rose by 0.77%. Further, other currencies including and Aussie dollar also depreciated on Tuesday against the USD by 0.14%. The linear relation between gold and the Euro remains strong: during the past month, the correlation between the gold and EURO/USD was 0.618 (daily percent changes). Therefore, if the Euro will continue to fall, it could also pressure down precious metals. Currently, the Euro/USD is declining.
Current Gold and Silver Rates as of August 8th
Gold (September 2012 delivery) is traded at $1,612 per t oz. a $0.8 or 0.05% decrease as of 08:07*.
Silver (September 2012 delivery) is at $27.91 per t oz – a $0.176 or 0.63% decrease as of 08:08*.
Daily Outlook for August 8th
Gold and silver started off the week with little movement and this low volatility may continue during the day. The upcoming auctions of Germany and U.S could offer some insight as to the market sentiment and the level of risk aversion in the financial markets. If the yields will continue to fall it could suggest other markets such as commodities and stocks will dwindle. If Bank of Japan will change its policy and introduce another stimulus plan, it could affect the forex markets, which, in turn could affect commodities markets. Finally, if the Euro and other “risk currencies” will continue to depreciate against the USD, then precious metals rates will also decline.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
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
9:00 – ECB Monthly Bulletin
13:30 –Canadian Trade Balance
13:30 –American Trade Balance
13:30 – U.S. Jobless Claims Weekly Report
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