The bullion market shifted direction again as both gold and silver resumed their downward trend that started last week. Both precious metals slightly declined yesterday along with other commodities such as oil and leading “risk related currencies” such as Euro and Aussie dollar against the USD. Main updates from yesterday: Bank of Canada left its short term interest rate unchanged. Japan’s trade balance (pdf file) for March, in which the deficit declined by 15.2% due to the decline in imports and rise in exports. Will gold and silver continue to fall? On today’s agenda: Spanish 10 Year Bond Auction, U.S. Jobless Claims, Philly Fed Manufacturing Index, BOC Gov Carney Speaks, G20 Meeting.
On Wednesday, the price of gold resumed its downward rend back and fell by 0.33% to $1,382.2; silver also decreased by 1.36% to $23.31. During April, gold declined by 13.33%; silver, by 17.62%.
The gold and silver futures volumes of trade declined on Wednesday to 96 thousand and 20 thousand, respectively. These numbers are lower than the volume traded a couple of weeks back. If the volume will remain low today, this could suggest the odds of sudden sharp shifts in the prices of gold and silver due to low volume will rise. The chart below shows the volume of trading gold and silver futures in the CME in recent weeks.
Currencies / Bullion Market – April Update
The Euro/ USD also fell on Wednesday by 1.09% to 1.3033. During April, the Euro/USD rose by 1.69%. Moreover, other currencies such as the Aussie dollar and Canadian dollar also depreciated yesterday against the U.S dollar by 0.91% and 0.55%, respectively. The tumble of leading currencies against the U.S dollar may have had little to do with the decline of gold and silver. The correlations among gold, Euro and Aussie dollar strengthened for April: the linear correlation between gold and Euro/USD was 0.55 (daily percent changes); the linear correlation between the gold and AUD/USD recent 0.69 (daily percent changes). These correlations suggest the recent decline of precious metals rates was slightly related to the developments in the foreign exchange markets.
On Today’s Agenda
U.S. Jobless Claims: in the latest report the jobless claims declined by 42k to reach 388k; this upcoming weekly update may affect the U.S dollar and consequently precious metals;
Philly Fed Manufacturing Index: In the previous March survey, the growth rate changed course and rose from -12.5 in February to 2.0 in March (the previous Philly Fed review);
Spanish 10 Year Bond Auction: Spain will issue its monthly with bond auction; in the recent bond auction, which was held at the beginning of April, the average rate reached 4.48% – the lowest rate in recent months;
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