Silver and Gold Outlook for February 13
Submitted by Trading NRG as part of our contributors program.
The prices of precious metals remained virtually unchanged yesterday as both metals inched up. Their modest rally coincided with the rise of “risk currencies” such as Euro and Aussie dollar against the USD. Will gold and silver continue to trade up? On today’s agenda: EU Industrial Production, Italian 10 Year Bond Auction, Governor King speaks, BOE Inflation Report, U.S. Retail Sales Report, U.S 10 Year Bond Auction and BOJ Monetary Policy.
On Tuesday, the price of gold inched up by 0.03% to $1,648.9; Silver also rose by 0.35% to $31.02. During the month, gold decreased by 0.70%; silver, by 1.01%. The modest gain in precious metals rates coincided with the developments in the forex market: the Euro, Japanese yen and Aussie dollar appreciated against the USD by 0.37%, 0.91% and 0.49%, respectively. The linear correlation between and several leading currencies pairs such as USD/Yen and AUD/USD are still mid-strong at -0.29 and 0.45, respectively. They suggest that if these currencies will continue to rally against the USD, they may pressure up bullion rates.
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Despite the different percent changes of gold and silver, the linear correlation of the two precious metal daily percent changes is still strong and robust, as indicated in the chart below. Nonetheless, the current correlation is at its lowest since July 2012. This means the two metals’ relation has loosened in recent weeks.
On Today’s Agenda
Bank of Japan –Monetary Policy Statement: Bank of Japan will come up with its monetary policy for February. In the previous meeting, the BOJ raised the inflation target from 1% to 2% and committed to an asset purchase program with no limit in 2013. The current monetary easing is at over 100 trillion yen. In the previous meeting, BOJ kept the interest rate unchanged at 0 to 0.1 percent. The steps taken by Prime Minster Shinzo Abe to jump start the Japanese economy, might further weaken the yen; if BOJ will continue to expand its monetary policy, this could further drag down the yen;
U.S. Retail Sales Report: this report will present the monthly developments in the retail sales and food services for January; in the recent report regarding December, the retail sales increased by 0.5% from the previous month;
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