The prices of precious metals spiked yesterday along with other commodities and risk related currencies such the Euro and British Pound against USD. The unfavorable report regarding the contraction in the U.S economy – U.S GDP for Q4 declined by 0.1% – may have influenced bullion traders to raise their demand for gold as a safe haven investment. The FOMC, as expected, left its current monetary policy unchanged. Currently, gold and silver are trading down. On today’s agenda: German Retail Sales, German unemployment Change, U.S Personal Spending, Canada’s GDP by Industry, U.S. Jobless Claims, and China Manufacturing PMI.
Here is a short outlook for precious metals for Thursday, January 31st:
Precious Metals – January Update
On Wednesday, the price of gold sharply increased by 1.15% to $1,679.9; Silver price also rose by 3.19% to $32.15. During the month, gold inched up by 0.3%; silver rose by 6.56%.
As seen below, the chart presents the developments in the normalized prices of bullion during the month (normalized to 100 as of December 31st). In recent days, the prices of silver and gold have rallied.
U.S. Jobless Claims Weekly Report: in the recent report the jobless claims declined by 5k to reach 330k; this upcoming weekly report may affect the U.S dollar and consequently commodities;
China Manufacturing PMI: According the latest report regarding December 2012 the Manufacturing PMI remained at 50.6; this means that China’s manufacturing sectors is slowly expanding; last week’s flash manufacturing PMI increased again. If this upcoming report will also show growth, it could signal an improvement in China’s economy;
German Retail Sales: In December, retail sales rose by 1.2% – higher than many had anticipated; if this report will rise again then it might strengthen the Euro;
German unemployment Change: the rate of unemployment of the Germany edged up again to 6.7%. This mean, the employment situation in Germany isn’t progressing. If in the upcoming report this trend will continue, it may adversely affect the Euro;
Canada’s GDP by Industry: the upcoming report will show the developments in major industrial sectors during November 2012. In the recent report regarding October 2012, the real gross domestic product inched up again by 0.1%. This report may affect the direction of the Canadian dollar, which is strongly linked with major commodities;
U.S Personal Spending: this monthly report refers to the shifts in income and outlays in the U.S during December; in the last report regarding November the personal income rose by 0.4%.
Currencies / Bullion Market – January Update
The Euro/ USD rose again on Wednesday by 0.56% to 1.3567. During the month, the Euro/USD increased by 2.83%. Alternatively, some currencies such as Aussie dollar and Canadian dollar depreciated yesterday against the USD by 0.54% and 0.07%, respectively. This mixed trend in these “risk currencies” may have had little to do with the recent rally of precious metals. The correlations among gold, Canadian dollar and Aussie remained stable in recent weeks: during January, the linear correlation between gold and USD/CAD reached -0.36 (daily percent changes); the linear correlation between the gold and AUD /USD reached 0.38 (daily percent changes). If these “risk currencies” will depreciate against the USD, they might adversely affect gold and silver.
Current Gold and Silver Rates as of January 31st
Gold (short term delivery) is traded at $1,677.4 per t oz. a $4.2 or 0.25% decrease as of 07:42*.
Silver (short term delivery) is at $31.99 per t oz – a $0.19 or 0.6% decrease as of 07:42*.
Daily Outlook for January 31st
Prices of precious metals rose again yesterday. The FOMC didn’t change its policy and also did refer to its future plans to halt its current monetary expansion plan. The big surprise also came from the U.S regarding the contraction in the U.S GDP. The government spending cuts and perhaps the hurricane at the last quarter of 2012 contributed to this result. This news raised the speculation that the U.S economy isn’t going anywhere and thus pulled up precious metals. The upcoming Chinese report regarding the manufacturing PMI could affect commodities prices. If the PMI will rally, this could pull up precious metals rates. The upcoming U.S reports including jobless claims and personal spending could affect not only the USD but also precious metals. If the U.S economy will show growth, this may pull down bullion rates. Finally, if the Euro and other “risk currencies” will decline against the USD, they might pressure down affect bullion.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
08:00 – German Retail Sales
08:55 – German unemployment Change
13:30 – Canada’s GDP by Industry
13:30 – U.S Personal Spending
13:30 – U.S. Jobless Claims Weekly Report
02:00 – China Manufacturing PMI
09:30 – GB Manufacturing PMI
13:30 – U.S. Non-Farm Payroll Report
15:00 – U.S. Manufacturing PMI
For further reading:
- Gold and Silver Outlook for January 28- February 1
- Weekly Outlook Financial Markets for January 28- February 1
- Gold and Silver Outlook for January
- Gold and Silver Yearly Outlook For 2013