Gold and silver, much like many other commodities, changed direction from last week and declined on Monday. The speculations around the future plans of ECB and Bank of China in regards to their respective stimulus plan could continue influencing bullion traders. Currently, gold and silver prices are falling. On today’s agenda: Great Britain CPI, Euro Area GDP 2Q2012, German and Euro Area ZEW economic sentiment, U.S. Retail Sales, Euro Area Industrial Production and U.S. Producer Price Index.
Here is a short outlook for precious metals for Tuesday, August 14th:
Precious Metals –August Update
On Monday, Gold declined by 0.63% to $1,612.6; Silver also fell by 1.05% to $27.77. During August, gold edged down by 0.12%; silver, by 0.53%.
As seen below, the chart presents the changes of normalized prices of precious metals in during the month (normalized to 100 as of July 31st). During August gold and silver didn’t do much.
The ratio between the two precious metals rose on Monday to 58.08. During August the ratio edged up by 0.4% as silver slightly under-performed gold.
On Today’s Agenda
U.S. Retail Sales Report: this report will show the monthly changes in the retail sales and food services for July 2012; in the recent report regarding June, the retail sales declined by 0.5% from the previous month;
Euro Area GDP 2Q2012 Report: Euro Stat will also publish the GDP growth rate of the Euro Area. According to the previous report, during the first quarter of 2012, the Euro Area GDP didn’t grow (Q-o-Q). This news might affect the Euro; the current expectations are of another a low growth rate or even another contraction for the second quarter;
U.S. Producer Price Index: In the recent report regarding June this index for finished goods edged up by 0.1% compared with May’s rate and increased by 0.7% in the last 12 months; this news might affect gold and silver prices
German and Euro Area ZEW economic sentiment: During July the ZEW indicator for Germany rose by 1.7 points to -19.6 points; the ZEW indicator for Euro Area fell to -22.3; if Euro Area and Germany’s economic sentiment will continue to dwindle, the Euro will plausibly remain weak against other currencies;
Euro Area Industrial Production: in the previous report the EU industrial production was up by 0.6% (M-O-M) during May;
Great Britain CPI: some expect the July inflation will further decline; in the recent report regarding June the annual CPI decreased from 2.8% to 2.4%; this news may affect the British pound;
Currencies / Bullion Market –August Update
The Euro/ USD changed direction and rose on Monday by 0.35% to 1.2333. During August (UTD) the Euro/USD nearly didn’t changed as it edged up by 0.24%. Alternatively, other currencies including Aussie dollar and Canadian dollar depreciated on Monday against the USD by 0.58% and 0.14%, respectively. The linear correlation between gold and Euro is still strong: during the month, the correlation between the gold and EURO/USD was 0.558 (daily percent changes). Therefore, if the Euro will trade up against the USD, it could eventually pull up precious metals.
Current Gold and Silver Rates as of August 14th
Gold (September 2012 delivery) is traded at $1,601.3 per t oz. a $11.3 or 0.7% decrease as of 14:15*.
Silver (September 2012 delivery) is at $27.73 per t oz – a $0.037 or 0.13% decrease as of 14:14*.
Daily Outlook for August 14th
Gold and silver prices started off the week on a negative note as it declined along with many other commodities prices. Despite yesterday’s fall, bullion rates might resume their slow growth from last week: the upcoming U.S reports including PPI and retail sales could affect bullion prices as indicated above. On the other hand, the upcoming EU reports including German and EU economic sentiment, GDP and industrial production could affect not only the Euro but also bullion rates. If these reports will not slow any progress in the EU economic activity, it could pull down the Euro, which tends to be positively correlated with precious metals.
Finally, if the Euro and other “risk currencies” will trade down against the USD it could curb to the rally of precious metals rates.
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
10:00– Euro Area GDP 2Q2012 Report
10:00– Euro Area Industrial Production
10:00 –German ZEW economic sentiment
10:00 –Euro Area ZEW economic sentiment
13:30 –U.S. Retail Sales Report
13:30 – U.S. Producer Price Index
09:30 – MPC Meeting Minutes
13:30 –U.S Core Consumer Price Index
14:00 – U.S. TIC Long Term Purchases
15:30 – U.S Crude Oil Stockpiles Report
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