Gold and silver prices changed direction and bounced back during yesterday’s trading. On the other hand many other commodities such as crude oil and currencies including Euro and Aussie dollar tumbled down. The European debt crisis continues to weaken the Euro and it drags along with it other commodities and currencies. The Italian and Spanish bond sales didn’t go well and may have contributed to the markets’ decline. The disappointing U.S pending home sales may have contributed to the rally in bullion rates. Currently precious metals prices are decreasing. On today’s agenda: German Retail Sales, Euro Area Annual Inflation, ADP estimate of U.S. non-farm payroll, U.S. GDP 1Q 2012, U.S. Jobless Claims, China Manufacturing PMI and FOMC Member Pianalto will give a speech.
Here is a short outlook for gold and silver for Thursday, May 31st:
Precious Metals – May Update
Gold price bounced back on Wednesday by 0.95% to $1,565; silver also increased by 0.69% to $27.98. During the month gold traded down by 5.92% and silver by 9.78%.
The chart below shows the normalized rates of these metals during the past couple of weeks (normalized to 100 as of May 15th). The chart shows that despite the sharp shifts and turns in bullion rates in the past couple of weeks, gold price is still around the $1,550 mark and silver around $27-$28 mark.
According to the recent report, the U.S. pending home sales index decreased by 5.5% in April, from a revised figure of 101.1 to 95.5
This report comes despite the rise in new and existing home sales in April. This news may signal the housing market isn’t picking up.
Italian 10 Year Bond Auction didn’t go well
Italian government issued another bond auction yesterday. Italy managed to sell only €5.73 billion out of the maximum target of €6.25 billion of five and ten year bonds.
Furthermore the 10 yr bond yield reached 6.03, which is higher than last bond sale’s yield of 5.84. This news may have also had been related to the tumble of the Euro during yesterday.
On Today’s Agenda
Second Estimate of U.S GDP for first quarter of 2012: This will be the second estimate of U.S’s first quarter 2012 real GDP growth. In the first estimate the GDP expanded by 2.2% (annual rate). If the second estimate will be much different than the first it could influence forex and bullion traders (for the first estimate of 1Q GDP).
U.S. Jobless Claims Weekly Report: in the latest update the jobless claims didn’t change much at 370,000; this upcoming weekly report may affect the USD and consequently commodities rates;
German Retail Sales: According to March 2012, retail sales increased by 0.8%; if this report will continue to be positive then it could strengthen the Euro;
Euro Area Annual Inflation: the inflation in Euro Area reached 2.6% in April;
FOMC Member Pianalto Speaks: Following the recent FOMC meeting, the FOMC member Pianalto will give a speech. If he will hint of the future steps of the FOMC it might affect the financial markets;
ADP estimate of U.S. non-farm payroll: ADP will announce its estimate for the upcoming U.S non-farm payroll change during May 2012 in anticipation for the upcoming no-farm report to be published tomorrow;
China Manufacturing PMI: in the previous report for April 2012 the Manufacturing PMI rose to 53.3; this index indicates the developments in China’s manufacturing sectors; if this upward trend will continue, this may also positively affect commodities prices;
Currencies / Gold & Silver Market – May Update
The Euro/U.S Dollar tumbled down its on Wednesday by 1.09% to 1.2367. During the month (UTD) the Euro/U.S Dollar declined by 6.6%. Furthermore, “risk currencies” such as the Australian dollar and Canadian dollar also sharply depreciated during Wednesday against the USD by 1.45% and 0.79%, respectively. If the U.S dollar will continue to rise against the Euro, it might also adversely affect bullion rates (even though this wasn’t the case yesterday). Currently the Euro is rising against the USD.
Current Gold and Silver Prices as of May 31st
Gold (June 2012 delivery) is traded at $1,562.7 per t oz. a $3 or 0.19% decrease as of 06:30*.
Silver (June 2012 delivery) is at $27.86 per t oz – a $0.123 or 0.44% decrease as of 06:30*.
Daily Outlook for May 31st
The sharp fall in the Euro and other commodities prices including WTI oil and natural gas didn’t coincide with the rise in gold and silver. The U.S pending home sales may have had some to do with the rise in bullion rates. Despite the rally in precious metals prices during yesterday there is still little evidence to support a shift in their trend. The tumble of the Euro is likely to adversely affect bullion rates even though it didn’t seem to do so yesterday. There are many reports on today’s agenda: If the U.S reports will be positive and will meet expectations including U.S GDP, jobless claims then they are likely to adversely affect bullion. On the other hand if the Euro related news (German Retail sales, EU inflation) and China’s manufacturing PMI will be positive, it could positively affect not only precious metals but also other commodities rates.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
07:00 – German Retail Sales
10:00 – Euro Area Flash Estimate of Annual Inflation
13:00 – FOMC Member Pianalto Speaks
13:15 – ADP estimate of U.S. non-farm payroll
13:30 – U.S. Department of Labor– Jobless Claims Weekly Report
13:30 – Second Estimate of U.S GDP 1Q 2012
15:30 – EIA U.S. Natural Gas Storage Update
2:00– China Manufacturing PMI
09:30 – GB Manufacturing PMI
13:30 – Canada’s GDP by Industry
15:00 – U.S. ISM Manufacturing PMI
13:30 – U.S. Non-Farm Payroll Report
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