The week started with little movement for both precious metals: the price of gold edged down while silver moderately increased. In the forex markets, the leading “risk related currencies” such as the Euro and Aussie dollar depreciated against the USD. In the equities markets the S&P500 index edged up. Will market volatility rise in the coming days? Yesterday, the U.S retail sales report came out and showed a moderate increase in retail sales during April. On today’s agenda: German ZEW economic sentiment and Australian Annual Budget Release.
Here is a short outlook for precious metals for Tuesday, May 14th:
Precious Metals – May Update
On Monday, gold slightly fell by 0.16% to $1,434.3; Silver edged up by 0.16% to $23.68. During the May, gold declined by 2.57%; silver, by 1.92%.
In the chart below are the normalized prices of gold and silver for 2013 (normalized to 100 as of April 15th). The prices of gold and silver haven’t done much in recent weeks.
The gold and silver futures volumes of trade have slightly increased on Friday to 267 thousand and 57 thousand, respectively. These numbers are still lower than the volume traded a couple of weeks back. If the volume will pick up today, this could suggest the volatility of prices of gold and silver due to high volume will increase. The chart below presents the volume of trading gold and silver futures in the CME during April and May.
German ZEW economic sentiment: The upcoming report will refer to the ZEW indicator of economic sentiment for Germany for April. In March the ZEW indicator for Germany sharply fell to 36.3 points; if Germany’s economic sentiment will fall further, the Euro will plausibly weaken against other currencies and consequently bullion rates;
Australian Annual Budget Release: this report will outline the government budget of Australia for 2013; if there will be a hike in the budget deficit it could have an adverse effect on the Aussie dollar;
Currencies / Bullion Market – May Update
The Euro/ USD fell on Monday by 0.11% to 1.2975. During the month, the Euro/USD decreased by 1.47%. Moreover, other currencies such as the Canadian dollar and Aussie dollar also depreciated yesterday against the U.S dollar by 0.06% and 0.73%, respectively. The correlations among gold, Canadian dollar and Aussie dollar remained robust: during recent weeks the linear correlation between gold and USD/CAD reached -0.66 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.61 (daily percent changes). If these correlations will remain robust, the direction of the Aussie, Canadian dollar and Euro are likely to partly affect the direction of bullion prices.
Current Gold and Silver Rates as of May 14th
Gold (short term delivery) is traded at $1,433.3 per t oz. a $1 or 0.07% decrease as of 01:04*.
Silver (short term delivery) is at $23.62 per t oz – a 0.32% decrease as of 01:04*.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
10:00 – German ZEW economic sentiment
10:30 – Australian Annual Budget Release
09:30 – Great Britain Claimant Count Change
Tentative – Bank of England Inflation Report
10:00 –EU First Quarter GDP 2013
10:30 – Governor King speaks
13:30 – Canada Manufacturing Sales
13:30 – U.S. Producer Price Index
14:00 – U.S. TIC Long Term Purchases
For further reading:
- Gold and Silver Outlook for May 13-17
- Weekly Outlook of Financial Markets for May 13-17
- Gold and Silver Outlook for May
- Gold and Silver Yearly Outlook For 2013
- Is the Golden Era of Gold Over?