Gold and silver declined for the third consecutive day. The testimony of Bernanke didn’t reveal the next move of the FOMC. The U.S housing starts report came out yesterday: housing starts rose by 6.9% during June (M-o-M). This report may have contributed to the decline in bullion. On today’s agenda: U.S. Jobless Claims Weekly Report, Philly Fed Manufacturing Index, and U.S. Existing Home Sales.
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Gold decreased again on Wednesday by 1.18% to $1,570.8; Silver also fell by 0.81% to $27.1. During July, gold declined by 2.08% and silver by 1.87%.
The chart bellow presents the normalized rates of these precious metals during the month (normalized to 100 as of June 29th).
On Today’s Agenda
Philly Fed Manufacturing Index: In the previous June survey, the growth rate declined from -5.8 in May to -16.6 in June. If this trend will continue this index may affect U.S Dollar and precious metals prices (the recent Philly Fed review);
U.S. Jobless Claims Weekly Report: in the latest report the jobless claims decreased by 26k to 350,000; this upcoming weekly report may affect the U.S dollar and consequently bullion prices;
Currencies / Bullion Market – July Update
The Euro/USD changed direction and edged down on Wednesday by 0.09% to 1.2283. Alternatively, other exchange rates such as AUD appreciated on Wednesday against the USD. The linear correlation between gold and Euro/USD is 0.70 (daily percent changes, for the last few weeks). If the Euro/USD and AUD/USD will change direction and rise, they may positively affect precious metals rates.
Following Bernanke’s testimonies at the Hill as he didn’t commit to another stimulus plan nor did he take this option off the table, bullion rates continued to dwindle. The U.S housing starts rose during June and thus may have contributed to the decline in precious metals rates. The U.S reports to be published today including Philly Fed, existing home sales and jobless claims may affect U.S stocks, forex and commodities markets. Finally, if the major exchange rates including Euro and Aussie dollar will change direction and appreciate against the USD, this could curb the decline in bullion and perhaps even change the direction of bullion to edge up.
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