Guest Commentary: Gold & Silver Daily Outlook 02.08.2012
The market has changed direction again as major commodities and currencies rallied from Monday's falls. Gold and silver started off the day falling but soon after they had changed direction and finished the day in the green. The positive news coming from Greece of a possible agreement on a bailout package might have helped rally the Euro. Bernanke stated in his testimony the challenges the U.S. economy is facing including cutting the budget deficit and reaching full employment. These news items may have helped pushing up gold and silver up. Today, China's CPI will come out.
Gold sharply rose on Tuesday by 1.36% to $1,748.4; silver also rose by a similar rate of 1.32% to $34.19.
The chart below shows the development of gold and silver during the past few weeks (metals prices are normalized to 100= January 24th).
The Euro/USD changed direction and sharply rose on Tuesday by 0.99% to 1.3260. During 2012 there was a strong linear correlation among the EURO and CAD and gold and silver. If the Euro will continue to trade rally it could indicate that metals will also increase.
On Today's Agenda
Chinese CPI: during November, the Chinese inflation rate sharply fell to an annual rate of 4.2%; this rate is coming very close to China's inflation target of 4% in annual terms. There are speculations of another drop in the CPI. If the rate will fall below 4% it could means the People Bank of China's will be able to ease some of its restrictions.
Metals changed direction again and sharply rose along with other commodities and currencies. The upcoming publication of the Chinese CPI might stir up the Asia markets and may also affect the direction of precious metals. The news from Greece will continue to occupy the financial markets and influence the direction of Euro. In turn, the development of the Euro might also affect the direction of gold and silver.
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By: Lior Cohen, M.A. in Economics, Commodities Analyst and Blogger at Trading NRG
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