The prices of gold and silver bounced back on Wednesday. Their rally didn’t coincide with the depreciation of the Euro and other risk related currencies against the USD. Will gold and silver continue to rise? On today’s agenda: ECB Rate Decision, Swiss National Bank Foreign Currency Reserve, Bank of England Rate Decision, Great Britain Manufacturing Production, U.S. Jobless Claims, RBA Monetary Policy Statement, China’s Trade Balance, Japan Current Account, French 10 Year Bond Auction.
On Wednesday, the price of gold inched up by 0.32% to $1,678.1; Silver price remained virtually unchanged at $31.88. During the month, gold increased by 1.05%; silver, by 1.73%.
The gold and silver futures volumes of trade have declined again on Wednesday to 106 thousand and 31 thousand, respectively. These numbers are the lowest for the month so far. The volume might pick up today on account of the many news items that are today’s agenda. Nonetheless, if the volume will remain low, this could suggest the prices of gold and silver will remain with little change, as they did during the week. The chart below shows the volume of trading gold and silver futures in the CME in January and February.
Currencies / Bullion Market – February Update
The Euro/ USD changed direction and fell on Wednesday by 0.43% to 1.3524. The Aussie dollar also depreciated against the USD by 0.67%. Some currencies such as Aussie dollar and yen remained virtually unchanged yesterday against the USD. The downward trend in the forex markets in which the Euro and Aussie dollar fell may have influenced precious metals traders. The correlations among gold, Canadian dollar and Aussie dollar were mid-strong in recent weeks. If the Euro and other risk currencies will appreciate again against the USD, they might pull up gold and silver.
On Today’s Agenda
Bank of England Rate Decision: Bank of England will announce its basic rate for February 2013 and of any developments in its asset purchase plan; as of January BOE kept rate unchanged at 0.5% and the asset purchase plan was left at £375 billion;
ECB Rate Decision: Back in July 2012 the ECB lowered its cash rate by 0.25pp to 0.75%. Since many continue to speculate if the ECB lower the rate again because: the economic situation in EU isn’t improving. Therefore, the ECB might lower the rate by another 0.25pp in the near future. If ECB will cut the rate again, it may pull down the Euro to US dollar exchange rate;
U.S. Jobless Claims: in the latest report the jobless claims rose by 38k to reach 368k; this upcoming weekly report may affect the U.S dollar and consequently commodities;
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