Guest Commentary: Gold & Silver Daily Outlook 03.21.2012
Gold and silver sharply declined yesterday along with the AUD on speculation regarding the economic growth of China and consequently Australia. The US housing market didn't show signs of progress as the U.S housing starts slightly declined during February 2012. Today, Great Britain MPC Meeting Minutes will be published, U.S Existing Home Sales, Japan's Trade balance and China flash Manufacturing PMI.
Gold sharply declined on Tuesday by 1.22% to $1,647; silver also sharply fell by 3.4% to $31.83. During March, gold declined by 3.76% and silver by 8.11%.
On Today's Agenda
China flash Manufacturing PMI: in the previous report, the HSBC Manufacturing index edged up to 49.7, but still means the PMI isn't growing; if the index will pass the 50 mark it could mean a positive signal and thus may also positively affect gold and silver;
Japanese Trade balance: The Japanese trade balance deficit for January 2012 increased by 7.8% to 612.8 billion YEN (roughly $7.38 billion). Japan's trade balance could provide insight into Japan's changes in demand goods and services;
U.S. Existing Home Sales: This report will refer to the February U.S. existing home sales; in the previous report regarding January the number of homes sold increased: the seasonally adjusted annual rate reached 4.57 million home sales – a 4.3% gain (for the recent existing home sales review);
U.S. Treasuries / Gold & Silver– March
The U.S. 10-year Treasury yield slipped on Tuesday by 0.01 percent points to 2.38% after it had risen by 0.08 percent points a day earlier; during March the 10 year treasury yield rose by 0.40 percent point. This rally in LT securities yields may indicate that the demand for "secure investments" continue to subside. During March there was a mid-weak negative correlation between the changes in U.S. long term Treasury yield and changes in gold. This chart suggests that if the LT U.S. treasury yield will continue to increase, it may indicate that gold will further decline.
Despite the sharp drop in metals during yesterday's trading, which may have been stem from the speculation regarding China's economic progress and the gold tax in India, the bullion market continues to zigzag with no clear trend in recent days. But on a monthly scale precious metal did take a dive. The drop in gold and silver may continue if the reports from Asia listed above will be negative. The upcoming U.S reports on the housing market may affect the strength USD and consequently may indirectly affect bullion. On the other hand the recent developments in Europe regarding the Greek bailout may rally the Euro and thus may also trade up gold.
This gold and silver outlook was first presents in Trading NRG
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By: Lior Cohen, M.A. in Economics, Commodities Analyst and Blogger at Trading NRG
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