The prices gold and silver rose on the first day of the week, despite the depreciation of the Euro and Australian dollar. I suspect, the ongoing speculations around Bernanke’s speech at Jackson Hole on Friday and his position on whether the FOMC will issue another stimulus plan, will continue to affect precious metals rates throughout the week. On today’s agenda: German Consumer Climate, Euro Area Monetary Development and U.S Consumer Confidence.
On Monday, Gold increased by 0.16% to $1,675.6; Silver also rose by 1.39% to $31.14. During August, gold increased by 3.8%; silver, by 11.5%.
On Today’s Agenda
U.S Consumer Confidence: according to the latest monthly report, the consumer confidence index rose in July (M-o-M). The current expectations are that the upcoming index may rise again; this report might affect commodities;
Euro Area Monetary Development: This monthly report will pertain to M3, M1 and loans to private sector in the Euro area during July. In the previous June report, the annual growth rate for M3 rose to 3.2%; M1 also increased to 3.5%. On the other hand, the annual growth rate of loans to private sector declined to -0.2%.
Currencies / Bullion –August Update
The Euro/ USD declined on Monday by 0.11% to 1.2499. Further, other currencies including AUD also depreciated on Monday against the USD by 0.34%. On the other hand, the CAD appreciated against the USD by 0.15%. The linear correlations between the gold and EURO/USD reached 0.52 (daily percent changes). Therefore, if these currencies pairs will trade down against the USD, it could also pull down precious metals.
The recent fall of the Euro and Australian dollar may have adversely affected the rates of bullion. If these currencies will continue to fall, then they may drag down gold and silver. The upcoming U.S report regarding the consumer confidence may affect not only the USD but also commodities rates. The European reports regarding German consumer climate and EU monetary development could affect the path of the Euro, which is strongly linked with bullion. Finally, the ongoing speculations around Bernanke’s speech at Jackson Hole and what his position will be vis-à-vis the future steps of the FOMC, i.e. whether there will be another stimulus plan, will continue to affect precious metals rates throughout the week .
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