Gold and silver declined again yesterday and thus both metals were traded down in eight out of the ten business days in May (so far). The speculation around the next move in the EU following the shift in the political climate in Greece keeps the Euro weak and thus may also been among the factors to pull down commodities prices including precious metals prices. On today's agenda: Euro Area GDP for Q1 2012, German and Euro Area ZEW economic sentiment reports, U.S Core CPI and U.S. TIC Long Term Purchases.
Gold decreased again on Monday by 1.45% to $1,561; silver also fell by 1.86% to $28.35. During the month gold tumbled down by 6.2% and silver by 8.59%.
The ratio between two precious metals continued its upward trend as it reached yesterday 55.06. During the month the ratio rose by 2.61% as silver has moderately underperformed gold during the month. In the chart below are the shifts of this ratio during May.
On Today's Agenda
U.S Core Consumer Price Index: In the latest U.S PPI report the PPI fell by 0.2%, while the core PPI rose by 0.2%. This might suggest the same may occur in the upcoming CPI report. This might affect the USD and in turn commodities;
Currencies & Bullion– May Update
The Euro/USD fell again on Monday by 0.73% to 1.2823 – the lowest level since mid-January 2012. Since these currencies are strongly linked with metals, if the USD will continue to trade up against these currencies; this may further pull down bullion.
Bullion rates continue their downward trend and I speculatetheir might continue their descent during the day. The U.S CPI report (mainly the core CPI) may affect the bullion markets if there will be a sharp shift in this index. The situation in Greece will keep the anxiety levels in the markets high so that the Euro might continue to show weakness against the USD and thus might drag along with it metals prices. Finally, the results of the Euro Area GDP especially the better than expected Germany’s GDP growth rate might curb (or even slightly reverse) the recent fall of not only the Euro but also themetals prices.
This gold and silver prices forecast 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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