Gold and silver prices continued to seek direction as both precious metals edged up on Thursday. These metals rose despite the decline of the Euro and perhaps due to the appreciation of other “risk currencies” including Aussie dollar and Canadian dollar. The recent U.S reports didn’t seem to have much of an effect on the financial markets: U.S jobless claims declined 6k to 361k; U.S trade balance deficit (goods and services) declined to $42.9 billion in June 2012. This news may have contributed to the appreciation of the USD. Currently, gold and silver prices are rising. On today’s agenda: Great Britain PPI Input, Canada’s Employment Report, U.S. Federal Budget Balance China’s Trade Balance and China’s New Loans.
Here is a short outlook for precious metals for Friday, August 10th:
Precious Metals –August Update
Gold edged up again on Thursday by 0.26% to $1,620.2; Silver rose by 0.08% to $28.10. During the month, gold edged up by 0.35%; silver, by 0.66%.
As seen, the chart below shows the developments of normalized rates of precious metals in the last few weeks (normalized to 100 as of July 31st). As seen, during the past couple of weeks gold and silver didn’t move much.
The ratio between the two precious metals increased on Thursday to 57.66. During August the ratio edged down by 0.31% as gold slightly under-performed silver.
On Today’s Agenda
Great Britain PPI Input: in the last report regarding June the input price declined by 2.2% (M-2-M); this news may affect the British Pound;
Canada’s Employment Report: In the previous employment report for June 2012, unemployment edged down to 7.2%; the employment rose by 181k during the past twelve months. The upcoming report might affect the CAD (see here the recent report);
U.S. Federal Budget Balance: this report indicates the government debt growth and thus may affect the USD. In the recent report regarding June the deficit rose by $59 billion to a deficit of $904 billion for the fiscal year of 2012; this is a decrease of 6.9% compared to 2011;
China’s Trade Balance: according to the previous report, China’s trade balance rose from a $18.7 billion surplus to a $31.7 billion surplus; if the surplus will further rise, it could indicate that China’s economic growth is progressing and thus may positively affect prices of commodities;
China New Loans: According to the recent report, the total loans rose mainly after the BOC had cut the interest rate and eased the restrictions on commercial banks regarding new loans;
Currencies / Bullion Market –August Update
The Euro/ USD fell again on Thursday by 0.48% to 1.2306. During August (UTD) the Euro/USD nearly didn’t changed as it edged up by 0.02%. Alternately, other currencies including Aussie dollar and Canadian dollar appreciated on Thursday against the USD by 0.09% and 0.32%, respectively. The linear correlation between gold and Euro is still strong even tough it slightly declined: during the past month, the correlation between the gold and EURO/USD was 0.599 (daily percent changes). Therefore, if the Euro will continue to depreciate, it could eventually drag down precious metals. Currently, the Euro/USD is declining.
Current Gold and Silver Rates as of August 10th
Gold (September 2012 delivery) is traded at $1,620.3 per t oz. a $0.1 or 0.01% increase as of 23:12*.
Silver (September 2012 delivery) is at $28.1 per t oz – a $0.003 or 0.01% increase as of 23:10*.
Daily Outlook for August 10th
Gold and silver are still zigzagging with an unclear trend as they haven’t shifted from their respective price range. The upcoming U.S federal budget report could signal the progress of the U.S economy and, in turn, affect the USD and commodities prices. The Canadian employment report could affect the Canadian dollar that tends to be linked with bullion rates. The Chinese reports could also affect commodities prices if they will show a sharp change. If these reports will show a decline in trade activity and new loans it could suggest China’s economy is slowing down which could adversely affect bullion rates. Finally, the ongoing decline of the Euro during the week could continue to curb the rally of bullion rates, while the rise in Aussie dollar and other “risk currencies” is contributing to the recovery of precious metals prices.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:30 – Great Britain PPI Input
13:30 – Canada’s Employment Report
19:00 –U.S. Federal Budget Balance
Tentative –China’s Trade Balance
Tentative – China New Loans
For further reading: