The prices of gold and silver shifted gear and sharply rose yesterday. The recent news from Europe including the decline in Germany’s factory orders in November, and the rise in Euro Area unemployment rate to 11.8% may have contributed to the decline of the Euro. In Japan, some suggest BOJ might decide to introduce additional monetary easing this month. In such a case, this could weaken the Japanese yen and consequently could also affect commodities. On today’s agenda: Final EU GDP 3Q 2012 Estimate, German Industrial Production, and U.S 10 Year Bond Auction.
On Tuesday, the price of gold rose by 0.97% to $1,662.2; Silver price also rose by 1.27% to $30.44. During the month, gold declined by 0.75%; silver rose by 0.87%.
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Currencies / Bullion Market – January Update
The Euro/ USD slipped on Tuesday by 0.25% to 1.3084. Alternately, some currencies such as Aussie dollar appreciated on Tuesday against the USD by 0.04%. The movement of these “risk currencies” didn’t seem to affect precious metals. The correlations among gold, Euro and Aussie remained weak in recent weeks: during December and January, the linear correlation between gold and Euro /USD is at -0.12 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.05 (daily percent changes). These weak correlations might suggest the recent developments in gold and silver didn’t coincide or resulted from the shifts in the foreign exchange markets. Nonetheless, if the Euro and other risk currencies will depreciate against the USD, they might adversely affect precious metals.
On Today’s Agenda
Final EU GDP 3Q 2012 Estimate: In the recent estimate the EU (27) GDP in the third quarter grew by 0.1% (quarterly basis); in the 2Q2012 the GDP growth rate was -0.2%. This shows a modest growth in the EU’s GDP. If there will be a sharp shift in this estimate it could also affect the Euro;
German Industrial Production: in the previous report the German industrial production declined by 2.6% (M-O-M) during October;
U.S 10 Year Bond Auction: the U.S government will issue its monthly bond auction; in the previous bond auction, which was held at the second week of December, the average rate reached 1.65%; if the rate will continue to fall, it could suggest that more traders become more bearish.
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