The prices of silver and gold continued their downward trend from last week and sharply fell on the first day of the week. Their decline coincided with the depreciation of several leading currencies such as the yen and Aussie dollar against the USD. Will gold and silver change direction and rally this week? Currently, gold and silver are declining. On today’s agenda: Swiss Inflation report, Great Britain CPI, ECONFIN Meetings, BOE Inflation letter, SNB Chairman Jordan’s Speech BOC Governor Carney Testifies, ECB President Speaks and U.S. Federal Budget Balance.
Here is a short outlook for precious metals for Tuesday, February 12th:
Precious Metals – February Update
On Monday, the price of gold fell by 1.07% to $1,648.4; Silver plummeted by 1.69% to $30.91. During the month, gold decreased by 0.73%; silver, by 1.36%. Despite the fall in precious metals rates, the forex market moved in a mixed trend: the Japanese yen and Aussie dollar sharply depreciated against the USD while the Euro inched up by 0.29%. The linear correlation between and several leading currencies pairs such as USD/Yen and AUD/USD are still mid-strong at -0.33 and 0.38, respectively. They suggest that if these currencies will continue to fall against the USD, they might also pressure down bullion rates.
In the chart below are the normalized rates of gold and silver between December and February (normalized to 100 as of November 30th). The prices declined in recent days.
The gold and silver futures volumes of trade slightly rose on Monday to 202 thousand and 41 thousand, respectively. These numbers are lower than the volume traded at the end of last month. If the volume will continue to pick up today, the prices shifts of precious metals might pick up in the days to follow.
On Today’s Agenda
Swiss Inflation: this report will show to the monthly changes in the Swiss consumer price index as of January 2013; in the recent report regarding December the CPI declined by 0.2%;
Great Britain CPI: this report will refer to the GB’s consumer price index as of January; in the previous monthly update, the annual CPI remained stable at 2.7%; if this the inflation will grow, it could lower the odds of the MPC augmenting its asset purchase program next month; this news might also affect the British pound;
ECONFIN Meetings: EU ministers of finance and EU leading policymakers will convene for the monthly meeting. In this meeting the EU ministers will likely discuss the recent multi-year EU budget decision and future development of the EU economy;
BOE Inflation letter: this report will present the yearly rate of GB’s inflation based on the estimate of Bank of England; the bank will publish the letter only if the inflation is exceed 3% or will be below 1%;
SNB Chairman Jordan’s Speech: the Swiss National Bank Chairman will speak in a press conference; if he will announce or imply of any shifts to the monetary policy of the SNB it could affect the Swiss Franc;
BOC Governor Carney Testifies: Bank of Canada’s governor Carney will testify before the House of Commons Standing Committee on Finance. If he will refer to any potential changes in the bank’s monetary policy, this could affect the Canadian dollar;
ECB President Speaks: Following last week’s press conference, in which Draghi referred to the strength of the Euro, the slow recovery of he EU economy and the expected fall in the inflation during the year, the market will see if Draghi will compensate and be optimistic regarding the future of the EU economy;
U.S. Federal Budget Balance: this upcoming report will present the developments in the U.S federal balance for January 2013; this report indicates the government debt growth and thus may affect the U.S dollar. In the latest report regarding December the deficit remained virtually unchanged’ the total deficit for the fiscal year of 2013 is at $293 billion. In comparison, the deficit in the same time in 2012 was $321 billion; this is decrease of 9.7% compared to 2012;
Current Gold and Silver Rates as of February 12th
Gold (short term delivery) is traded at $1,644.2 per t oz. a $4.9 or 0.3% decrease as of 09:51*.
Silver (short term delivery) is at $30.71 per t oz – a $0.2 or 0.65% decrease as of 09:51*.
Daily Outlook for February 12th
Prices of precious metals continued to decline yesterday. Their fall may have had to do with the strengthening of the USD but it may also be related to the rise in long term securities yields. The upcoming Bank of Japan monetary policy meeting to be held tomorrow might affect not only the Japanese yen but also commodities prices. The recent depreciation of the Indian rupee along with the rise in import taxes is likely to curb the demand for gold in this country. If ECB President will provide some big headlines from his speech it could affect not only the Euro/USD but also precious metals. The upcoming U.S related report regarding federal budget balance could affect the USD and thus the direction of gold and silver. If the deficit won’t rise, it could lower the financial risk of the US and thus pressure down gold and silver rates. Finally, if the Euro and other “risk currencies” will continue to depreciate during the day against the USD, they might adversely affect precious metals.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
08:15 – Swiss Inflation
09:30 – Great Britain CPI
All Day – ECONFIN Meetings
Tentative – BOE Inflation letter
10:00 – SNB Chairman Jordan’s Speech
13:45 – BOC Gov Carney Testifies
15:30 – ECB President Speaks
19:00 –U.S. Federal Budget Balance
10:00 –EU Industrial Production
Tentative – Italian 10 Year Bond Auction
10:30 –Governor King speaks
Tentative – BOE Inflation Report
13:30 –U.S. Retail Sales Report
18:00 – U.S 10 Year Bond Auction
Tentative – Bank of Japan – Rate Decision and Monetary Policy Statement
For further reading:
- Gold and Silver Outlook for February 11-15
- Weekly Outlook Financial Markets for February 11-15
- Gold and Silver Outlook for February
- Gold and Silver Yearly Outlook For 2013