The prices gold and silver rose on the first day of the week, despite the depreciation of the Euro and Australian dollar. I suspect, the ongoing speculations around Bernanke’s speech at Jackson Hole on Friday and his position on whether the FOMC will issue another stimulus plan, will continue to affect precious metals rates throughout the week. Currently, gold and silver prices are falling. On today’s agenda: German Consumer Climate, Euro Area Monetary Development and U.S Consumer Confidence.
Here is a short outlook for precious metals for Tuesday, August 28th:
Precious Metals –August Update
On Monday, Gold increased by 0.16% to $1,675.6; Silver also rose by 1.39% to $31.14. During August, gold increased by 3.8%; silver, by 11.5%.
As seen below, the chart presents the developments of normalized prices of precious metals in the last several weeks (normalized to 100 as of July 31st). During recent weeks gold and silver have had an upward trend.
The ratio between the two precious metals decreased again on Monday to 53.81. During August the ratio fell by 6.96% as gold under-performed silver.
On Today’s Agenda
U.S Consumer Confidence: according to the latest monthly report, the consumer confidence index rose in July (M-o-M). The current expectations are that the upcoming index may rise again; this report might affect commodities rates;
German Consumer Climate: Gfk group will publish their German consumer climate index. If this report will remain positive it might also have a positive effect on the Euro/USD currency pair;
Euro Area Monetary Development: This monthly report will pertain to M3, M1 and loans to private sector in the Euro area during July. In the previous June report, the annual growth rate for M3 rose to 3.2%; M1 also increased to 3.5%. On the other hand, the annual growth rate of loans to private sector declined to -0.2%. This news may affect the Euro/USD and consequently commodities;
Currencies / Bullion Market –August Update
The Euro/ USD declined on Monday by 0.11% to 1.2499. During August (UTD) the Euro/USD rose by 1.58%. Further, other currencies including Aussie dollar also depreciated on Monday against the USD by 0.34%. On the other hand, the Canadian dollar appreciated against the USD by 0.15%. The linear correlations among precious metals, Aussie dollar and Euro are still strong: during July and August, the correlation between the gold and EURO/USD reached 0.52 (daily percent changes); between gold and AUD/USD, 0.39. Therefore, if these currencies pairs will trade down against the USD, it could also pull down the prices of precious metals.
Current Gold and Silver Rates as of August 28th
Gold (September 2012 delivery) is traded at $1,662.0 per t oz. a $13.6 or 0.81% decrease as of 06:19*.
Silver (September 2012 delivery) is at $30.675 per t oz – a $0.462 or 1.48% decrease as of 06:19*.
Daily Outlook for August 28th
The prices of precious metals increased again on Monday after they had increased during recent days. The recent fall of the Euro and Australian dollar may have adversely affected the rates of bullion. If these currencies will continue to fall, then they may drag down gold and silver. The upcoming U.S report regarding the consumer confidence may affect not only the USD but also commodities rates. The European reports regarding German consumer climate and EU monetary development could affect the path of the Euro, which is strongly linked with bullion rates. Finally, the ongoing speculations around Bernanke’s speech at Jackson Hole and what his position will be vis-à-vis the future steps of the FOMC, i.e. whether there will be another stimulus plan, will continue to affect precious metals rates throughout the week .
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
07:00 – German Consumer Climate
09:00 – Euro Area Monetary Development
15:00 – U.S Consumer Confidence
08:00 – KOF Economic Barometer
13:30 – Second U.S GDP 2Q 2012 Estimate
15:00 – U.S. Pending Home Sales
15:30 – U.S Crude Oil Stockpiles Report
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