The prices of gold and silver started the week on a positive note. The recent of Bernanke may have contributed to the recent rally of precious metals on Monday. Will gold and silver continue to rise today? Currently, the prices of gold and silver are increasing. China is showing record high demand for gold. This could be another factor to keep the prices of gold high. On today’s agenda: Great Britain CPI, BOE Inflation Estimate, U.S. Retail Sales Report and U.S. Producer Price Index.
Here is a short outlook for precious metals for Tuesday, January 15th:
Precious Metals – January Update
On Monday, the price of gold rose by 0.53% to $1,669.4; Silver price also increased by 2.31% to $30.38. During January, gold inched down by 0.32%; silver rose by 3.01%.
As seen below, the chart shows the changes in the normalized prices of precious metals during the month (normalized to 100 as of December 30th). During January, silver and gold have had an unclear trend.
The ratio between the two precious metals decreased on Monday to 53.71. During the month the ratio fell by 3.24% as gold under-performed silver.
The gold and silver futures volumes of trade have slightly declined on Monday to 161 thousand and 46 thousand, respectively. These numbers are very similar to the volume traded on last Monday. If the volume will rise today, this could suggest the odds of sudden sharp shifts in the prices of gold and silver due to low volume will decline. The chart below presents the volume of trading gold and silver futures in the CME in recent weeks.
On Today’s Agenda
Great Britain CPI: in the recent report regarding November the annual CPI remained at 2.7%; if the inflation will rise, it could lower the odds of the MPC expanding its asset purchase program; this news might affect the British pound;
BOE Inflation Estimate: this report will present the yearly rate of GB’s inflation according to Bank of England; it will be published as a letter only if the inflation is exceed 3% or below 1%;
U.S. Retail Sales Report: this report will presents the monthly developments in the retail sales and food services for December; in the recent report regarding November, the retail sales rose by 0.3% from the previous month;
U.S. PPI: This report will show the inflation rate from the producers’ stand point. In the latest report regarding November this index for finished goods declined by 0.8% compared with October’s rate but rose by 1.5% in the last 12 months; this news might affect precious metals;
Currencies / Bullion Market – January Update
The Euro/ USD increased on Monday by 0.26% to 1.3378. During the month, the Euro/USD increased by 1.4%. Moreover, some currencies such as Aussie dollar also appreciated yesterday against the USD by 0.3%. The recent rally of “risk currencies” may have slightly affected precious metals rates. The correlations among gold, Euro remained weaker than normal: during January, the linear correlation between gold and Euro /USD reached 0.05 (daily percent changes); the linear correlation between the gold and AUD /USD strengthened in recent days to reach 0.39 (daily percent changes). Thus if the Euro and other risk currencies continue to appreciate against the USD, they are might positively affect gold and silver.
Current Gold and Silver Rates as of January 15th
Gold (short term delivery) is traded at $1,673 per t oz. a $3.9 or 0.23% increase as of 06:50*.
Silver (short term delivery) is at $31.18 per t oz – a $0.08or 0.26% increase as of 06:50*.
Daily Outlook for January 15th
Prices of precious metals changed direction and rallied on Monday. This rally coincided with the rise in other commodities prices and “risk currencies”. Will this rally last? Bernanke’s recent speech didn’t curb the rally of precious metals even though he did pose concerns to the actual effect of the Fed’s monetary policy on the U.S economy. Nonetheless, Bernanke still sees the Fed maintaining the current quantitative easing program during the year. This speech seems to have contributed to the recent rally of precious metals and “risk currencies”. The upcoming U.S reports including: retail sales and PPI could affect not only the USD but also bullion rates. If these reports will show the U.S economy is growing, they might pull down precious metals prices. The upcoming GB CPI report could affect the British pound and consequently commodities prices. Finally, if the Euro and other “risk currencies” will rise against the USD, they might positively affect precious metals.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:30 – Great Britain CPI
Tentative – BOE Inflation Estimate
13:30 –U.S. Retail Sales Report
13:30 – U.S. Producer Price Index
10:00 – Euro Area CPI
13:30 –U.S Core Consumer Price Index
14:00 – U.S. TIC Long Term Purchases
02:30 – Australia Employment Report
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