Gold and silver prices declined yesterday and thus continue to dwindle with an unclear trend. Yesterday the IMF issued a report in which it stated European banks’ financial problems are far from over and they may reduce their balance sheets by as much as $2.6 trillion. The IMF also forecasted the EU will contract in 2012 by 0.3% and expand by only 0.9% in 2013. This grim outlook may bring down a bit the Euro during today’s trading. This comes after the IMF had announced the global growth forecast is 3.5% for 2012. There are several items on today’s agenda. These items are: U.S Jobless Claims Weekly report (update: Jobless claims edged down to 386k), U.S. Existing Home Sales, Philly Fed Manufacturing Index and Bank of Canada’s Monetary Policy report. Currently gold and silver prices are slightly rising.
Here is a short outlook on gold and silver prices for Thursday, April 19th:
Gold and Silver– April Update
Gold price declined on Wednesday by 0.7% to $1,639.6; silver also decreased by 0.59% to $31.49. During April, gold decreased by 1.93% and silver by 3.07%.
The chart below presents the developments in gold and silver prices during the month (prices are normalized to March 30th).
The ratio between gold and silver slipped again to 52.07. During the month the ratio increased by 1.17% as gold has moderately outperformed silver. In the chart below are the shifts in this ratio during April (up to date).
On Today’s Agenda
U.S. Jobless Claims Update: this weekly update will refer to the changes in the initial jobless claims for the week ending on April 14th; in the previous report the jobless claims rose to 380,000; this upcoming weekly update may affect the strength of the US dollar and consequently bullion prices;
U.S. Existing Home Sales: in the previous report regarding February the number of homes sold decreased: the seasonally adjusted annual rate reached 4.59 million home sales – a 0.9% decline; if this trend will continue it may weaken the U.S dollar (for the recent existing home sales review);
Philly Fed Manufacturing Index: This survey provides an estimate for the progress of the US economy. In the previous survey, the growth rate moderately rose to +12.5. If this trend will continue this index may positively affect not only U.S Dollar but also American stock indexes; furthermore this may also adversely affect bullion prices as it may lower the chances of the Fed to issue another QEU program (the recent Philly Fed review);
Bank of Canada’s Monetary Policy and Press Conference: Bank of Canada will publish its monetary policy report; if there will be major headlines coming from this press conference it could affect the Canadian dollar; gold and silver prices are strongly linked with the Canadian dollar;
Forex / Gold & Silver Market – April
The Euro/U.S Dollar edged down on Wednesday by 0.14% to 1.3123. During April Euro/U.S Dollar decreased by 1.7%; on the other hand, during yesterday’s trading the Aussie dollar and Canadian dollar moderately appreciated against the U.S. dollar by 0.03% and 0.82%, respectively. These currencies tend to be positively and linearly correlated with gold and silver prices. The chart below shows the development of the relation between the daily percent changes of the Euro/USD and gold price during recent months. As indicated below the current relation varies but is still strong and robust. If the US dollar will depreciate against these currencies, this may signal gold and silver may rise.
Current Gold and Silver April 19th are trading slightly up
Gold (May 2012 delivery) is traded at $1,647.9 per t oz. as of 14:42*.
Silver (May 2012 delivery) is at $31.805 per t oz as of 14:43*.
Daily Forecast and Analysis
Gold and silver prices kept moving with an unclear trend and may continue to do so in the days to come until the FOMC meeting next week. Today’s reports to come out including the U.S jobless claims, U.S Philly Fed and existing home sales will show the changes in three main areas: employment, manufacturing and housing. I speculate that if these sectors will show progress they may positively affect the U.S dollar, lower the chances of another QE program and thus bring gold and silver prices slightly down during today’s trading. But if these reports won’t be positive or only show slight improvement at best then bullion prices may change direction and edge up.
Here is a reminder of the top events and reports that are planned for today and tomorrow (all times GMT):
13:30 – U.S. Jobless Claims Weekly Report
15:00 – U.S. Existing Home Sales
15:00 – Philly Fed Manufacturing Index
15:30 – Bank of Canada’s Monetary Policy & Press Conference (at 16:15)
15:30 – EIA U.S. Natural Gas Storage Report
09:00 – German Business Climate Survey
13:00 – Canada’s Core CPI
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