The prices of silver and gold didn’t do much yesterday as gold slightly declined and silver rose. HSBC published its China flash Manufacturing PMI, in which the PMI rose from 51.5 in December to 51.9 in January. This means the manufacturing sectors in China are growing at a slightly faster pace in recent weeks. Bank of Canada left its Overnight Rate unchanged at 1% but also reduced its 2013 GDP outlook from 2.3% to 2%. This news lead the Canadian dollar to depreciated against major currencies. How will this news affect precious metals? Major investment banks such as Morgan Stanley and Goldman Sachs estimate gold prices will rally in the coming months on account of U.S policymakers tacking the debt ceiling issue. On today’s agenda:Spain’s unemployment Change Flash German, French and Euro Zone Manufacturing PMI and U.S. Jobless Claims.
On Wednesday, the price of gold declined by 0.38% to $1,686.7; Silver price on the other hand rose again by 0.76% to $32.41. During the month, gold increased by 0.71%; silver, by 7.41%.
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Currencies / Bullion Market – January Update
The Euro/ USD inched down on Wednesday by 0.03% to 1.3318. Moreover, some currencies such as Aussie dollar also depreciated on Wednesday against the USD by 0.10%. Canadian dollar also sharply depreciated against the USD by 0.75%. The recent modest fall of “risk currencies” may have slightly contributed to the modest drop in gold prices. Nonetheless, the correlations among gold, Canadian dollar and Aussie remained weaker than in 2012: during January, the linear correlation between gold and USD/ Canadian dollar reached -0.23 (daily percent changes); the linear correlation between the gold and AUD /USD reached 0.35 (daily percent changes). If the Euro and other risk currencies will continue to depreciate against the USD, they are might adversely gold and silver.
On Today’s Agenda
Spain’s unemployment Change: the rate of unemployment of the Spain increased again to 25%. This mean, the employment situation in Spain isn’t improving. If in the upcoming report this trend will continue, it may negatively affect the Euro;
Flash German, French and Euro Zone Manufacturing PMI: In the previous report regarding December 2012, the German PMI slipped to 46 i.e. the manufacturing conditions are contracting at a slightly faster rate. This report serves as an indicator to the economic shifts of the Euro Area’s leading economies’ manufacturing conditions; this news, in turn, may affect the Euro/USD and commodities;
U.S. Jobless Claims Weekly Report: in the recent report the jobless claims declined by 37k to reach 335k; this upcoming weekly report may affect the U.S dollar and consequently precious metals;
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