Gold and silver prices slightly declined on Tuesday. The news of the rate reduction of RBA adversely affected the Aussie dollar. The U.S manufacturing PMI increased to 54.8, an increase of 1.4 from March’s reading. China’s manufacturing PMI didn’t reach expectation but was still showing growth and apparently didn’t affect much precious metals. But these news items may have helped rally the U.S stock market and crude oil prices yesterday. Currently bullion are trading down. On today’s agenda: Euro Area Unemployment Rate, ADP estimate of U.S. non-farm payroll and U.S Factory Orders.
Here is a short analysis for gold and silver for Wednesday, May 2nd:
Precious Metals– May Update
Gold price edged down on Tuesday by 0.11% to $1,662.4; silver also fell by 0.28% to $30.92. During the week gold decreased by 0.14% and silver by 1.53%.
The chart below shows the shifts in both metals prices in the past several weeks h (rates are normalized to 100 as of April 13th).
The ratio between these two metals increased to 53.75. During the week the ratio increased by 1.41% as gold has outperformed silver during the month. In the chart below are the developments of this ratio during recent days.
On Today’s Agenda
U.S Factory Orders: This report will show the changes in U.S. factory orders of manufactured durable goods during February; this report will offer some insight to the progress of the U.S economy and could affect the direction of the U.S dollar;
Euro Area Unemployment Rate: the Euro Area unemployment rate edged up from 10.7% in January to 10.8% in February; if this upward trend will continue it may adversely affect the Euro;
ADP estimate of U.S. non-farm payroll: ADP will announce its estimate for the upcoming U.S non-farm payroll change during the month of April 2012 in anticipation for the upcoming no-farm report to be published by Friday;
Forex / Bullion Market – May Update
The Euro/USD slipped on Tuesday by 0.03% to 1.3235. During the week the Euro/USD decreased by 0.14%; furthermore, the “risk currencies” including the Australian dollar also depreciated on Monday against the U.S. dollar by 0.91%. The recent news of RBA’s rate reduction was the big headlines pulling down the Aussie dollar. The chart below shows the development of the linear correlation between bullion and Euro/USD in 2011 and 2012. Since the Euro is strongly and positively correlated with gold and silver , if the U.S dollar will continue to appreciate against the Euro and Aussie dollar, this may affect precious metals .
Current Bullion Rates as of May 2nd
Gold (June 2012 delivery) is traded at $1,653.8 per t oz. a $8.6 or 0.52% decrease as of 09:24*.
Silver (June 2012 delivery) is at $30.78 per t oz – a $0.15 or 0.48% decrease as of 09:25*.
Daily Outlook and Analysis for May 2nd
Gold and silver prices slightly declined during the past couple of days. The upcoming U.S reports may continue to adversely affect precious metals especially if their reports will be positive and will coincide with the current expectations. If the EU unemployment report will present another increase in rate of unemployment this may adversely affect the Euro, which is strongly linked with bullion prices and thus may also adversely affected them.
Here is a reminder of the top events and reports that are planned for today and tomorrow (all times GMT):
04:30 – Reserve Bank of Australia – Cash Rate Statement
09:30 – GB Manufacturing PMI
15:00 – U.S. ISM Manufacturing PMI
13:30 – U.S. Department of Labor– Jobless Claims Weekly Report
13:30 – ECB Press Conference and Euro Rate Decision
15:00 – U.S. ISM Non-Manufacturing PMI
15:30 – EIA U.S. Natural Gas Storage Report
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