Gold and silver prices changed direction and plummeted yesterday after the testimony of Bernanke in the Senate didn’t bring the kind of news bullion traders had hoped for. Bernanke stated in his testimony that economic conditions are improving mainly the US real estate market; he also stated the U.S labor market isn’t in such a dire condition as many had claimed; he voiced his concerns for the debt crisis in Europe; the main thing was that he didn’t refer to any additional steps the Fed might consider, i.e. no hints for additional QE program. China also brought some big headlines as Bank of China cut the interest rates by 0.25 percent points to 6.31 for the first time since 2008. This news may signal for many that China’s economy isn’t doing well and thus may also further bring down commodities prices. Jobless claims decline to 377k. Currently gold and silver are falling. On today’s agenda: U.S trade balance report, Canadian Trade Balance, Chinese CPI, Great Britain 10 Year Bond Auction, Canada’s Employment Report and Great Britain PPI Input.
Here is a short analysis for gold and silver for Friday, June 8th:
Precious Metals –June Update
Gold price plunged on Thursday by 2.83% to $1,588; silver also decreased by 3.25% to $28.53. During the month gold traded up by 1.52% and silver by 2.78%.
The chart below shows the normalized rates of these metals during the month (normalized to 100 as of May 31st).
The ratio between the two metals edged up on Thursday to 55.66. During the month the ratio fell by 1.23% as silver has slightly out-performed gold.
U.S. Jobless Claims Declined to 377k
According to the recent update, the jobless claims declined by 12k to 377,000; this weekly report may have positively affected the U.S dollar and consequently may have also contributed to the declined in bullion rates on Thursday;
On Today’s Agenda
American Trade Balance: This monthly report for April will present the changes in imports and exports of goods and services to and from the U.S, including commodities; according to the recent American trade balance report regarding March 2012 the goods and services deficit increased during the month to $51.8 billion.
Canadian Trade Balance: In the previous report regarding March 2012, exports decreased by 0.4%, and imports fell by 0.6%; as a result, the trade balance surplus rose to $351 million; this report may affect the trading of the Canadian dollar which tends to be strongly correlated with price of gold;
Canada’s Employment Report: In the previous employment report for April 2012, unemployment edged up by 0.1 percent points to 7.3%; the employment increased by 58k. the upcoming report might affect the Canadian dollar (see here the recent report);
Great Britain PPI Input: this report will present the yearly rate of GB’s producer price index for May 2012; in the last report regarding April the input price declined by 1.5% (M-2-M); this news may affect the British Pound;
GB 10 Year Bond Auction: the British government will issue another bond auction; in the previous bond auction, which was held at the beginning of April, the rate reached 2.22%;
Chinese CPI: during April, the Chinese inflation rate slightly declined to an annual rate of 3.4%; this rate is below China’s inflation target of 4% in annual terms. BOC’s recent move to cut interest rate might affect the future consumer price index in the months to follow.
Currencies / Gold & Silver Market – June Update
The Euro/US Dollar slipped yesterday by 0.17% to 1.256. During the month (UTD) the Euro/U.S Dollar increased by 1.6%. Furthermore, other exchange rates such as the Aussie dollar and Canadian dollar also slightly depreciated during Thursday against the USD by 0.33% and 0.03%, respectively. If the U.S dollar will continue to appreciate against these currencies, it may push down bullion rates. Currently the Euro is falling against the USD.
Current Gold and Silver Prices as of June 8th
Gold (July 2012 delivery) is traded at $1,567.8 per t oz. a $20.2 or 1.27% decrease as of 09:06*.
Silver (July 2012 delivery) is at $28.19 per t oz – a $0.589 or 2.06% decrease as of 09:08*.
(* GMT)
Daily Outlook for June 8th
Bullion prices tumbled down after both metals rose in the last few days. Despite the recent testimony of Bernanke that didn’t provide any insight for the next move of the Fed, the speculation is likely to continue. I still think the Fed won’t introduce another stimulus plan in the near future. Today’s American trade balance report might offer some insight about the developments in the US economy. China’s rate cut might also affect commodities prices and further drag them down as many consider this move as a sign one the leading economies isn’t doing well.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
Today
09:30 – Great Britain PPI Input
Tentative – GB 10 Year Bond Auction
13:30 – Canada’s Employment Report
13:30 –Canadian Trade Balance
13:30 –American Trade Balance
3:30 – Chinese CPI
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