The prices of gold and silver changed direction and edged down on Wednesday. Moreover, many other commodities and currencies pairs have also declined yesterday. In the recent U.S bond auction the U.S average interest rate for the 10 year bond inched down to 1.625 (in the previous bond auction it was 1.65). China’s trade balance report was published today, it showed China’s exports rose in December. This news might positively influence commodities traders. Will precious metals change direction again and rally? On today’s agenda: Great Britain Bank Rate & Asset Purchase Plan, ECB Euro Rate Decision, U.S Jobless Claims, and Japan Current Account.
On Wednesday, the price of gold declined by 0.4% to $1,655.5; Silver price also slipped by 0.7% to $30.22. During the month, gold declined by 1.15%; silver edged up by 0.17%.
The gold and silver futures volumes of trade have fallen in recent days following the big market awakening after the holiday season. On Wednesday the volume reached 157 thousand and 40 thousand, for gold and silver, respectively. These numbers are lower than the volume traded in the past several days. Due to the forthcoming rate decisions in Europe, the volume might pick up today. If the volume will rise, this could suggest the odds of sudden sharp shifts in the prices of gold and silver due to high volume will decrease.
On Today’s Agenda
MPC Rate Decision and Asset Purchase Plan: The MPC will announce the Bank’s interest rate for January and of any changes to BOE’s asset purchase plan; as of December BOE left rate unchanged at 0.5% and the asset purchase plan was left at £375 billion;
U.S. Jobless Claims Weekly Report: in the previous report the jobless claims rose by 10k to reach 372k; this upcoming weekly report may affect the U.S dollar and consequently precious metals;
ECB Euro Rate Decision: Back in July 2012 the ECB decided to reduce its cash rate by 0.25pp to 0.75%. Since then, however, the speculations around another rate reduction were high. The ECB has ample reasons to reduce its basic rate: the EU economy isn’t improving, the inflation is stable, the Fed’s stimulus plan pressures up the Euro and many EU banks continue to struggle. Thus, the ECB might decide to cut the rate by another 0.25pp in the near future. Despite these factors, many estimate the ECB will keep the rate unchanged again;
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