Gold and Silver Outlook for April 23

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Submitted by Trading NRG as part of our contributors program.

The week started on a positive note for both gold and silver as they bounced back from their plunge during last week. Yesterday, it was reported that U.S existing home sales slipped in March on account of limited inventory. The number of home sales fell by 0.6% to an adjusted annual rate of 4.92 million. Later that day, China’s flash manufacturing PMI report (opens pdf) came out, in which the PMI slipped in April slipped to 50.5 – in March it was 51.6. This month’s index is the lowest in two months. It means, the manufacturing sectors inChina are still growing but at a slower pace. This news might pull back down precious metals. Will gold and silver change course? On today’s agenda: Flash German, French and Euro Zone Manufacturing PMI, Canada Retails Sales, BOC Gov Carney Speaks, U.S. new home sales, and Australia’s CPI for Q1 2013.

On Monday, the price of gold sharply rose by 1.84% to $1,421; Silver also increased by 1.59% to $23.32. During the month, gold declined by 10.90%; silver, by 17.56%.

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The Euro/ USD edged up on Monday by 0.11% to 1.3066. Moreover, other currencies such as the Japanese yen and Canadian dollar also slightly appreciated yesterday against the U.S dollar by 0.29% and 0.10%, respectively. The appreciation of leading currencies against the U.S dollar may have slightly contributed to the recovery of gold and silver. The correlations among gold, Euro and Aussie dollar remained strong: during April the linear correlation between gold and USD/CAD was -0.58 (daily percent changes); the linear correlation between the gold and USD/Yen was 0.33 (daily percent changes). If these correlations will hold up, precious metals rates might be affected by the developments in the foreign exchange markets.

On Today’s Agenda

U.S. New Home Sales: This report will pertain to March; in the previous report (opens pdf; for February), the sales of new homes fell to an annual rate of 411,000 – a 6% drop (month over month); if the number of home sales will continue to dwindle, it may indicate a sign of a slowdown in the recovery in the U.S real estate market which may also influence bullion traders.

Flash German and Euro Zone Manufacturing PMI: In the recent monthly report regarding March 2013, the German PMI declined to 48.9 i.e. the manufacturing conditions are contracting at a slow rate. This report serves as an indicator to the economic developments of the Euro Area’s leading economies’ manufacturing conditions;

For further reading:

Gold and Silver Outlook for April 22-26

Is the Golden Era of Gold Over?