Gold and silver prices started off the week on a negative note as both precious metals rates edged down. The Euro/USD also slipped. The results of the Greek elections, in which the pro bailout party had won, didn’t seem to impress forex and commodities traders. All eyes in Europe continue to stare at Spain. In yesterday’s G20 meeting the leaders talked about the EU debt crisis and Spain’s soaring borrowing costs: Spain’s bond yields rose to 7.29. The G20 meeting will continue today. The FOMC meeting starts today and will conclude tomorrow with a press conference and statement. Currently gold and silver are falling despite the sharp rally of the Euro/USD. On today’s agenda: Great Britain CPI, Euro Area and German ZEW economic sentiment, U.S. Housing Starts and Building Permits and Japanese Trade balance.
Here is a short analysis for gold and silver for Tuesday, June 19th:
Precious Metals –June Update
Gold price edged down on Monday by 0.07% to $1,627; silver also decreased by 0.24% to $28.67. During the month gold rose by 4.01% and silver by 3.29%.
The chart below presents the normalized rates of these precious metals during June (normalized to 100 as of May 31st).
The ratio between the two metals rose on Monday to 56.75. During the month the ratio rose by 0.7% as silver has slightly under-performed gold.
On Today’s Agenda
U.S. Housing Starts: this report was historically correlated with gold price – as housing starts rose, gold prices tended to decline the following day (even when controlling to the U.S dollar effect); in the previous report, the adjusted annual rate reached 717,000 in April 2012, which was 2.6% above March’s rate;
U.S. Building Permits: last time, building permits decreased by 7% (M-o-M) in the adjusted annual rate of building permits and reached 715,000 in April 2012 (the recent U.S building permits and housing starts review);
Great Britain CPI: some expect the May inflation rate will be lower than in previous month; in the recent report regarding April the annual CPI fell from 3.5% to 3.0%; this news may affect the direction of the British pound;
Euro Area ZEW economic sentiment: For May 2012 the ZEW indicator for Euro Area fell to -2.4;
German ZEW economic sentiment: During May the ZEW indicator for Germany fell to 10.8; as Germany’s economy is progressing, the Euro will plausibly remain strong against other currencies;
Japan’s trade balance: The Japanese trade balance deficit for April 2012 fell by 22.1% compared with March 2012, to reach 480.1 billion YEN (roughly $6.07 billion) deficit (seasonally adjusted figures). This decrease is due to the decrease in imports by 1.7%, and the growth in exports by 0.5%;
Currencies / Gold & Silver Market – June Update
The Euro/US Dollar slipped on Monday by 0.48% to 1.2577. During the month (UTD) the Euro/U.S Dollar increased by 1.71%. On the other hand, other exchange rates including the Aussie dollar slightly appreciated during Monday against the USD by 0.49%. If the U.S dollar will depreciate against these currencies, it may pressure up bullion rates. Currently the Euro is edging up against the USD.
Daily Outlook for June 19th
Gold and silver are likely to trade up today especially if the upcoming U.S reports including U.S housing starts will be negative. The G20 meeting continues to produce big headlines, but eventually I don’t think the result of the G20 meeting will mount up to a resolution. The ongoing concerns over the Spanish debt crisis are likely to keep the Euro weak and thus may adversely affect bullion rates. Finally, the speculation around the resolution of the FOMC meeting could keep bullion rate edging up during the day.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
Today
09:30 – Great Britain CPI
10:00 –Euro Area ZEW economic sentiment
10:00 –German ZEW economic sentiment
13:30 – U.S. Housing Starts
13:30 – U.S. Building Permits
All Day – G20 Meeting
00:50 – Japanese Trade balance
Tomorrow
09:30 – MPC Meeting Minutes
17:30 – FOMC Meeting (Statement)
19:00 – FOMC Economic Projection
19:15 – FOMC Press Conference – Bernanke Speaks
3:30– China flash Manufacturing PMI
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