Gold and silver sharply declined for the fourth consecutive business day. Yesterday both metals were traded down following the U.S jobless claims and sharply fell even below expectations. On the other hand the U.S non-manufacturing PMI dropped to 53.5. The forex market didn’t move much but U.S stock markets and major commodities prices declined during yesterday’s trading. It was also reported that gold producers (including Barrick) aren’t doing well as their suffering from rising labor costs and delays. ECB President took a page from Bernanke’s book and also didn’t introduce additional stimulus plan or another rate cut. Today, the U.S non-farm report will come out and there are exceptions it won’t be much better than last month’s report. This news items may stir up the markets including bullion markets.
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Gold sharply declined on Thursday by 1.16% to $1,634.8; silver also declined by 2.07% to $30.01. During the week gold decreased by 1.8% and silver by 4.5%.
On Today’s Agenda
U.S. Non-Farm Payroll: in the previous report for March, the U.S employment market didn’t improve as it did in the previous months as the number of non-farm payroll employment increased by only 120k; this report might affect bullion. The chart below should give you some sense of the linear correlation between the news of the labor market and the changes in the daily percent changes in bullion prices.
Forex / Bullion Markets –Update
The Euro/USD slipped on Thursday by 0.04% to 1.3153; furthermore, the CAD and AUD also depreciated on Thursday. Since these currencies are strongly and positively correlated with bullion, if the USD will keep appreciating against these exchange rates; this may negatively affect gold and silver.
Gold and silver continued their downward trend and this may change direction today if the U.S non-farm employment will disappoint again and will be well below exception. On the other hand, if the USD continues its rally against major currencies this may keep bullion weak.
For further reading: Gold and Silver Prices Outlook for May 2012