Gold and silver prices didn’t do much yesterday and gold edged down while silver moderately declined. The U.S jobless claims didn’t reveal a major shift in the number of claims. The American trade deficit increased. And China’s industrial output growth didn’t match expectations as the retail sales rose in April by only 14.1% compared to a year earlier the least since February 2009. This news is currently adversely affecting the Asian markets and may also adversely affect precious metals trading during the day. On today’s agenda: U.S PPI, Great Britain PPI and Canada’s employment report. Currently precious metals prices are falling.
Here is a short analysis for bullion for Friday, May 11th:
Precious Metals – May Update
Gold edged up on Thursday by 0.08% to $1,595.5; silver on the other hand continued its downward trend and decreased by 0.22% to $29.18. During the month the yellow metal decreased by 4.13% and silver by 5.93%.
The chart below presents the normalized prices of precious metals during month so far (metals normalized to 100 as of April 30th).
The ratio between the two metals slightly rose again to 54.68. During the month the ratio increased by 1.91% as gold has moderately outperformed silver during May. In the chart below are the changes of this ratio during May.
St. Deviation of Bullion
During May the volatility of these precious metals rates has declined as their standard deviations have decreased and reached their lowest level in 2012. Therefore, the prices of bullion are much less volatility in recent weeks than in earlier stages of 2012.
U.S. Jobless Claims Edged Down to 367k
According to the recent weekly update the number of jobless claims slightly fell from the revised figure of 368,000 for the week ending April 28th to 367,000 for the week ending on May 5th. Since there was much of shift in the number of jobless claims this news didn’t have much of an effect on the financial markets and only might have slightly adversely affected the U.S dollar.
American Trade Deficit Rose to $51.8 Billion
In the recent trade balance report the goods and services deficit increased during March from $45.4 billion in February to $51.8 billion and increase of $6.4 billion. This increase in deficit was mostly due to an increase in imports by $11.7 billion compared with a lower increase in exports of only $5.3 billion. Most of this deficit was originated in an increase in goods deficit.
On Today’s Agenda
U.S. Producer Price Index: In the previous report for March the index for finished goods remained flat compared with February’s rate and increased by 2.8% in the past 12 months; this news might affect today’s movement of precious metals;
Great Britain PPI Input: this report will present the yearly rate of GB’s producer price index for April 2012; in the last report regarding March the input price rose by 1.9% (M-2-M);
Canada’s Employment Report: In the previous employment report for March 2012, unemployment edged down by 0.2 percent points to 7.2%; the employment sharply rose by 82k. the upcoming report might affect the Canadian dollar and consequently also affect commodities including bullion (see here the recent report);
Foreign Exchange / Precious Metals Market – May Update
The Euro/U.S Dollar changed direction on Thursday by 0.05% to 1.2937. During the month so far the Euro/U.S Dollar fell by 2.28%; furthermore, the Canadian dollar and Aussie dollar also moderately appreciated on Thursday against the U.S. dollar by 0.03% and 0.3%, respectively. Since the Euro, Aussie dollar and Canadian dollar are strongly and positively linked with precious metals , if the U.S dollar will change direction and will continue to appreciate against these currencies; this may adversely affect bullion . Currently the Euro is falling against the USD.
Current Rates as of May 11th
Gold (June 2012 delivery) is traded at $1,583.1 per t oz. a $12.4 or 0.78% decrease as of 07:59*.
Silver (June 2012 delivery) is at $28.725 per t oz – a $0.453 or 1.55% decrease as of 07:59*.
Daily Outlook for May 11th
Gold changed direction yesterday and edged up while silver continued its descent. I speculate bullion rates will resume their decline and trade down during today’s trading. The upcoming report on the U.S PPI might affect the markets including precious metals markets. The recent news of China’s slower than anticipated growth in industrial production might also help pull down commodities prices including gold and silver prices.
Finally the ongoing developments in Greece and France might keep the Euro weak and thus adversely affect precious metals.
Here is a reminder of the top events and reports that are planned for today (all times GMT):
Tentative –IEA monthly oil report
09:30 – Great Britain PPI Input
13:30 – Canada Unemployment Rate and Employment Report
13:30 – U.S. Producer Price Index
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