Gold and silver prices started off the week rising but will this rally continue today? Currently gold and silver are slightly falling. The recent news from China is that its demand for gold will only grow by 13% to 870 metric tons and not 1,000 tons as it was initially projected by the gold council. This news might also pull down bullion rates.
On today’s agenda: Great Britain Manufacturing Production, European Council Meeting, China’s Trade Balance and New Loans.
Here is a short outlook for precious metals for Tuesday, July 10th:
Precious Metals – July Update
Gold rose on Monday by 0.65% to $1,589.1; silver also bounced back and increased by 1.95% to $27.44. During July, gold declined by 0.94% and silver by 0.61%.
The chart below presents the normalized prices of these precious metals during the past several weeks (normalized to 100 as of June 15th).
The ratio between the two precious metals declined on Monday to 57.9. During July the ratio edged down by 0.33% as gold and silver moved at a similar rate.
St. Deviation of Gold and Silver
Despite the sharp changes in the bullion markets during the month, the volatility of precious metals prices slightly lower than in June higher, as the standard deviations of gold and silver (daily percent changes) were slightly lower than the standard deviations in June.
On Today’s Agenda
Great Britain Manufacturing Production: in the last report regarding April the index fell by 0.7% (M-2-M); this news may affect the British Pound;
European Council Meeting: The European Council Meeting will be held in Brussels and the EU ministers of finance will convene and talk about the recent political and monetary developments in Europe;
China’s Trade Balance: if China’s trade balance surplus will remain high, it could indicate that China’s economic growth is progressing and thus might positively affect prices of bullion;
China New Loans: According to the recent report, the total loans rose mainly after the BOC decided to lower the interest rate and ease the restrictions on new loans; the rate cut of BOC might continue raising the number of loans taken in the upcoming months;
Currencies / Gold & Silver Market – July Update
The Euro/US Dollar rose on Monday by 0.19% to 1.2313. During the month (UTD) the Euro/USD declined by 2.8%. Alternatively, other exchange rates such as the Australian dollar slightly depreciated on Monday against the USD by 0.03%. There is still a very strong relation among Euro/USD gold and silver. The linear correlation between gold and Euro/USD is 0.62 (daily percent changes, for June/July). If the Euro/USD will trade down, it could drag down precious metals rates.
Current Gold and Silver Rates as of July 10th
Gold (August 2012 delivery) is traded at $1,585.5 per t oz. a $3.6 or 0.23% decrease as of 08:24*.
Silver (August 2012 delivery) is at $27.24 per t oz – a $0.204 or 0.74% decrease as of 08:22*.
Daily Outlook for July 10th
Gold and silver started off the week on a positive note as they were trade up along with many other commodities rates such as crude oil. This rally might be short lived as gold and silver might change direction and decline during today’s trading. Today China’s trade balance and new loans reports will come out. There are those who suspect that at least the trade balance will signal an economic slowdown in China; this news could adversely affect commodities rates. If the EU economic council will come out with big headlines it could also affect forex and commodities markets. Finally, if the Euro and other risk currencies will resume their downward trend, then they are likely to drag down along with them bullion prices.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:30 – Great Britain Manufacturing Production
All Day – European Council Meeting
Tentative –China’s Trade Balance
Tentative – China New Loans
13:30 –Canadian Trade Balance
13:30 –American Trade Balance
Tentative – German 10 Year Bond Auction
18:00 – U.S 10 Year Bond Auction
19:00 – Minutes of FOMC Meeting
Tentative – Bank of Japan –Monetary Policy Statement
For further reading: