Precious metals continue to zigzag and gold and silver rates declined yesterday after they rallied a day earlier. Conversely, leading currencies such Euro and Aussie dollar rose against the USD yesterday. In the U.S, retail sales slightly increased by 0.6%; jobless claims fell again by 12k to reach 346k. These positive news items may have contributed to the decline of precious metals rates yesterday. Further, the recent rally in equities markets in the U.S may have also contributed to the downfall of bullion. Will gold and silver change direction again and bounce back today? On today’s agenda: Euro Area CPI, Canada Manufacturing Sales, U.S. Producer Price Index, and UoM Consumer Sentiment.
Here is a short outlook for precious metals for Friday, June 14th:
Precious Metals – June Update
On Thursday, gold changed course again and slipped by 1.02% to $1,377.9; silver also declined by 0.98% to $21.58. During June, gold declined by 1.06%; silver, by 2.90%.
In the chart below are the normalized rates of gold and silver in June (normalized to 100 as of May 31st). The prices of gold and silver haven’t moved in an unclear trend in recent days.
The ratio between the two precious metals inched down on Thursday to 63.84. During June, the ratio increased by 1.90% as gold slightly out-performed silver.
The similar percent changes of gold and silver in recent days convinced with the strengthening of the linear correlation of these two precious metals daily percent shifts, as indicated in the chart herein. During June the linear correlation of their daily percent changes reached the highest level in the past couple of years so far, which means the two metals’ relation has tighten in recent weeks.
On Today’s Agenda
Euro Area CPI: according to the previous update the annual CPI sharply fell to 1.2%, which is much lower than ECB’s target inflation; if the inflation will continue to dwindle, it could raise the chances of ECB cutting again its cash rate;
Canada Manufacturing Sales: This report will pertain to the manufacturing sales in Canada as of April. It may affect the USD/CAD currencies pair, which is strongly correlated with commodities prices. In the recent report regarding March 2013, manufacturing sales slipped by 0.3%;
U.S. Producer Price Index: In the recent report for April, this index for finished goods declined again by 0.7% compared with March’s rate and rose by 0.6% in the past 12 months; this news might affect the USD and commodities prices;
UoM Consumer Sentiment (preliminary): University of Michigan will publish its preliminary consumer sentiment monthly report; this survey could offer an insight to latest changes in U.S consumers’ sentiment; based on the recent update, the sentiment index sharply increased to 83.7;
Currencies / Bullion Market – June Update
The Euro/ USD increased on Thursday by 0.28% to 1.3375. During the month, the Euro/USD increased by 2.89%. Moreover, other currencies such as the Aussie dollar and Japanese yen also appreciated yesterday against the U.S dollar by 1.63% and 0.68%, respectively. Despite the different direction these currencies took compared with the shifts of precious metals prices, the linear correlations among gold, silver, Euro and Aussie dollar strengthened in recent weeks as presented in the chart below. If these correlations will hold up, the developments in the forex markets could also affect precious metals prices.
Current Gold and Silver Rates as of June 14th
Gold (short term delivery) is traded at $1,385.40 per t oz. a $7.6 or 0.55% increase as of 02:11*.
Silver (short term delivery) is at $21.77 per t oz – a 0.84% increase as of 02:11*.
Here is a reminder of the major events and publications that are scheduled for today (all times GMT):
10:00 – Euro Area CPI
13:30 – Canada Manufacturing Sales
13:30 – U.S. Producer Price Index
14:55 – UoM Consumer Sentiment
For further reading: