The prices of silver and gold changed pace yesterday from their slow movement at the beginning of the week and tumbled down. Following yesterday’s fall, any gain recorded in precious metals from earlier this week was erased. The recent positive news from the U.S may have contributed to the strengthening of the USD against certain currencies such as Aussie dollar and Japanese yen and at the same time pulling down precious metals. These news items include: the rise in the flash manufacturing PMI in January to 56.1 (in December it reached 54), and the drop of 5k in the jobless claims to reach by January 19th 330k do much yesterday as gold slightly declined and silver rose. The manufacturing conditions in Germany also improved in January as the PMI rose from 50.3 in December to 53.6 in January. This news may have contributed to the rally of the Euro. Will gold and silver continue to fall today? On today’s agenda: German Business Climate Survey, Flash GB GDP Q4 2012, Canada’s CPI and U.S New Home Sales.
On Thursday, the price of gold fell by 1% to $1,669.9; Silver price changed direction and tumbled down by 2.2% to $31.7. During the month, gold slipped by 0.29%; silver rose by 5.05%.
Despite the different percent changes between gold and silver in recent years, the linear correlation of the two precious metal daily percent changes is still robust, as indicated in the chart herein. The linear correlation is slightly weaker than in October and November but moderately stronger than in December 2012 and January 2012.
On Today’s Agenda
U.S. New Home Sales: in the previous report (for November), the sales of new homes rose to an annual rate of 377,000 – a 4.4% gain (month over month); if the number of home sales will rally, it may indicate a sign of some recovery in the U.S real estate market which may also affect the direction of the USD.
German Business Climate Survey: In the recent report for December 2012, the business climate index increased from 101.4 in November to 102.4 in December; if this trend will continue, it might positively affect the Euro;
Flash GB GDP Q4 2012: This report will present the first estimate of the quarterly growth rate of the British economy during the fourth quarter of 2012; during the third quarter the GB economy expanded by 1% (Q-2-Q);
Canada’s CPI: According to the Canadian CPI report for November 2012, the core CPI remained flat during the month. This report might affect the Canadian dollar, which is also strongly linked with commodities;
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