The prices of gold and silver moved in an unclear trend as gold slightly rose while silver declined. This unclear trend was also recorded in the forex markets as the Euro depreciated against the USD while other risk related currencies such as the Aussie dollar appreciated against the USD. Yesterday, Reserve Bank of Australia left its interest rate unchanged at 3%. This news may have contributed to the modest rise of the Aussie dollar yesterday. U.S factory orders rose in December but by a lower than anticipated pace. Will gold and silver start to rise? Currently gold price is rising. On today’s agenda: Australian Retail Sales, U.S. ISM Non-Manufacturing PMI, and Australian Retail Sales.
Here is a short outlook for precious metals for Tuesday, February 5th:
Precious Metals – February Update
On Monday, the price of gold rose by 0.35% to $1,675.7; Silver price decreased by 0.76% to $31.72. During the month, gold increased by 0.91%; silver, by 1.22%.
As seen below, the chart shows the changes in the normalized prices of precious metals between January and February (normalized to 100 as of December 31st). During recent weeks, the prices of silver and gold have had an unclear trend.
The gold and silver futures volumes of trade have declined on Monday to 121 thousand and 39 thousand, respectively. These numbers are lower than the volume traded during last week. The chart below shows the volume of trading gold and silver futures in the CME in recent weeks. If the volume will remain low the prices of gold and silver are likely to keep moving in an unclear trend.
On Today’s Agenda
Euro Area Retail Sales: This monthly report will show the shifts in EU retail sales for December. In November 2012, retail sales inched up by 0.1%; if this report will continue to show a rise in sales index, it might strengthen the Euro;
U.S. ISM Non-Manufacturing PMI: During December 2012 this index rose to 56.1% – this means the non-manufacturing is growing and at a faster pace than in the previous month; this index may affect forex and commodities trading;
Australian Retail Sales: In the previous update, the seasonally adjusted retail sales inched down by .01% during November; this news may affect the Aussie dollar;
Currencies / Bullion Market – February Update
The Euro/ USD fell on Monday by 0.92% to 1.3515. During the month, the Euro/USD decreased by 0.47%. The Canadian dollar also depreciated against the USD. Conversely, some currencies such as Aussie dollar appreciated yesterday against the USD by 0.29%. The mixed trend in the forex markets in which the Euro and Canadian dollar fell while the AUD rose may have influenced precious metals traders. The correlations among gold, Canadian dollar and Aussie dollar were mid-string in recent weeks: during January/February, the linear correlation between gold and USD/CAD reached -0.33 (daily percent changes); the linear correlation between the gold and AUD /USD reached 0.47 (daily percent changes). These correlations might suggest the recent movement of gold and silver was partly affected or resulted from the shifts in the foreign exchange markets. If the Euro and other risk currencies will depreciate again against the USD, they might pull down gold and silver.
Current Gold and Silver Rates as of February 5th
Gold (short term delivery) is traded at $1,676.9 per t oz. a $0.5or 0.03% increase as of 06:38*.
Silver (short term delivery) is at $31.74 per t oz – a $0.02 or 0.06% increase as of 06:38*.
Daily Outlook for February 5th
Prices of precious metals didn’t do much yesterday after they had increased during last week. I still guess metals will continue to slowly rally this week. The recent U.S report regarding the factory orders showed a lower than expected growth. If the forthcoming U.S reports will continue to show lower than expected growth or even worse no growth in the economic indicators, this could keep the prices of gold and silver high. The upcoming reports for today include the Euro Area and Australia retail sales monthly updates. If these reports won’t show growth they might pull down their respective currencies. The U.S non-manufacturing PMI might have some effect on the USD and consequently precious metals. If the PMI will further rise, it may pull down the prices of bullion. Finally, if the Euro and other “risk currencies” will depreciate during the week 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):
11:00 – Euro Area Retail Sales
15:00 – U.S. ISM Non-Manufacturing PMI
00:30 – Australian Retail Sales
11:00– German Factory Orders
02:30 – Australia Employment Report
For further reading:
- Gold and Silver Outlook for February 4-8
- Weekly Outlook Financial Markets for February 4-8
- Gold and Silver Outlook for February
- Gold and Silver Yearly Outlook For 2013