Submitted by Trading NRG as part of our contributors program.
Gold and silver continued to dwindle yesterday: both metals prices slightly declined on the last day of the month. Earlier today the RBA announced it will cut its interest rate by 0.5 percent point to 3.75%. This rate reduction is larger than many had anticipated. The reason for this sharp cut is due to RBA’s concerns over the growth rate of Australia’s economy. This is the sharpest rate cut the Bank had done since February 2009. This news already affected the Aussie dollar which is currently traded down. This news might also affect bullion prices which are strongly correlated with the AUD.
On today’s agenda: Great Britain and U.S Manufacturing PMI.
The full daily outlook on gold and silver for May 1st
Gold slipped on Monday by 0.04% to $1,664.2; silver also decreased by 1.26% to $31.02. The chart below shows the shifts in both metals during the month (normalized to 100 as of March 30th).
On Today’s Agenda
U.S. Manufacturing PMI: This report will refer to the monthly development in the manufacturing sector on a national level during April. During March the index edged up to 53.4%, which means the manufacturing is growing at a slightly faster pace;
Forex / Bullion– May Update
The Euro/USD slightly decreased on Monday by 0.11% to 1.3239; furthermore, AUD also depreciated on Monday by 0.4%. The recent news of RBA’s rate reduction will likely to depreciate the AUD, which is strongly and positively correlated with bullion. This direction of the USD may affect bullion. The chart below shows the development in the moving correlation of AUD/USD and gold (daily percent changes) between October 2011 AND April 2012.
Daily Analysis
Bullion slightly declined on Monday and may continue to trade down today. The recent RBA rate cut is likely to affect the AUD which is linked with bullion. Finally, the upcoming U.S report on the manufacturing PMI may also affect the metals via the shifts in the U.S dollar.
For further reading:
Gold and Silver Prices Weekly Outlook for April 30- May 4
Gold and Silver Prices Outlook for May 2012
