The prices of gold and silver moved in differed directions on Wednesday. Gold price slightly increased while silver edged down. The speculations around Cyprus’s bailout may have contributed to the decline of the Euro and the rise of gold price as a safe haven investments. Yesterday, U.S pending home sales report came out and showed the index edged down in February compared to January. Will gold and silver change course again? Currently, gold price is falling. On today’s agenda: German Retail Sales, Euro Area Monetary Development, Canada’s GDP by Industry, Third U.S GDP 4Q 2012 Estimate, and U.S. Jobless Claims.
Here is a short outlook for precious metals for Thursday, March 28th:
Precious Metals – March Update
On Wednesday, the price of gold rose by 0.66% to $1,606.2; Silver also decreased by 0.25% to $28.58. During March, gold rose by 1.81%; silver, by 0.64%.
In the chart below are the normalized rates of gold and silver during the month (normalized to 100 as of February 28th). The prices of gold and silver slightly fell in recent weeks.
The gold and silver futures volumes have reached on Wednesday to 238 thousand and 51 thousand, respectively. For silver, this number is the second highest volume traded during March. If the volume will decline today, this could lower the odds of sudden shift in the prices of gold and silver due to high volume. The chart below shows the volume of trading gold and silver futures in the CME during the month.
German Retail Sales: This monthly report will present the changes in German retail sales during February. In January 2013, retail sales rose by 3.1% – higher than many had anticipated;
Euro Area Monetary Development: This monthly report will refer to the changes of the M3, M1 and loans to private sector in the Euro area during February 2013. In the recent January report, the annual growth rate for M3 rose to 3.5%; M1 also increased to 6.7%. Finally, the annual growth rate of loans to private sector declined again to -0.4%. This news suggests the EU economy isn’t progressing;
Canada‘s GDP by Industry: the upcoming update will present the developments in major industrial sectors during January 2013. In the recent update regarding December 2012, the real gross domestic product declined by 0.2%;
Third U.S GDP 4Q 2012 Estimate: This will be the third and final estimate of U.S’s fourth quarter 2012 real GDP growth. In the recent estimate the U.S GDP edged up by 0.1% in the fourth quarter; in the third quarter the GDP grew by 2.7%; in the 2Q2012 the GDP growth rate reached 1.7% (annual rate). This presents a decline in the growth rate for the US’s GDP. If there will be a sharp change in the growth rate from second to the third Q4 estimate;
U.S. Jobless Claims: in the recent report the jobless claims changed course and rose by 2k to reach 334k; this upcoming weekly update may affect the path of U.S dollar and consequently commodities and stocks markets;
Currencies / Bullion Market – March Update
The Euro/ USD resumed its downward trend and fell on Wednesday by 0.62% to 1.278. During the month, the Euro/USD decreased by 2.2%. Moreover, many other currencies such as the Aussie dollar and Canadian dollar also depreciated yesterday against the U.S dollar by 0.38% and 0.02%, respectively. The decline in risk related currencies against the U.S dollar didn’t seem to help pull up the prices of gold and silver prices. The correlations among gold, Euro/USD and Aussie dollar/USD remained mid-weak during the month: during March, the linear correlation between gold and Euro/USD was -0.13 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.07 (daily percent changes). These weak correlations imply the recent developments in precious metals markets had little to do with the daily changes in the foreign exchange markets.
Current Gold and Silver Rates as of March 28th
Gold (short term delivery) is traded at $1,597.8 per t oz. a $8or 0.5% decrease as of 15:59*.
Silver (short term delivery) is at $28.46 per t oz – a 0.57% decrease as of 15:59*.
Here is a reminder of the major events and publications that are scheduled for today and tomorrow (all times GMT):
08:00 – German Retail Sales
09:00 – Euro Area Monetary Development
13:30 – Canada’s GDP by Industry
13:30 – Third U.S GDP 4Q 2012 Estimate
13:30 – U.S. Jobless Claims
14:55 – UoM Consumer Sentiment
20:00 – Canada’s annual budget release
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