Guest Commentary: Gold & Silver Daily Outlook 05.24.2012
Gold and silver tumbled down again along with other commodities. The Euro/USD reached yesterday its lowest level in nearly two years. The speculation around the future of Greece in the EU is likely to be among the factors dragging down not only the Euro but also metals. The U.S new home sales rose in April. The recent Summit of the European Leaders didn't bring big headlines as German Chancellor Merkel still opposes a jointly issued EU bond.
On today's agenda: U.S core durable goods, German Business Climate Survey, ECB President Draghi Speaks, U.S. Jobless Claims, and GB revised GDP Q1 2012.
On Today's Agenda
U.S Core Durable Goods: This report may indirectly show the shifts in U.S. demand for commodities. According to previous report for March, new orders of manufactured durable goods decreased by $8.4 billion to $203 billion; if this report will continue to be negative then it could curb the recent appreciation of the USD;
U.S. Jobless Claims Weekly Report: in the latest report the jobless claims remained unchanged at 370,000; this upcoming weekly report may affect the USD;
Currencies / Bullion Market – May Update
The Euro/USD declined again on Wednesday by 0.79% to 1.2584 – the lowest level in nearly two years; it seems that many consider the possibility of Greece exiting the EU as a viable option. Furthermore, other "risk currencies" also depreciated during Wednesday. Since these currencies pairs are still linearly correlated with bullion, if the USD will continue to trade up, bullion might also continue to fall.
U.S. Treasuries / Gold– May
The U.S. 10-year Treasury yield resumed their descent on Wednesday and reached 1.73%. This decline in LT securities yields may indicate that the demand for "secure investments" continue to increase especially considering the developments in Europe. During May there was a low and positive correlation between the daily changes in U.S. long term Treasury yield and shifts in gold. Nevertheless the trend of both indexes as seem in the chart below shows that both U.S. 10 yr yield and gold have a downward trend during the month.
Daily Outlook for May 24th
Bullioncontinued their downward trend during yesterday's trading. The recent news of the rise in U.S new home sales along with the speculation around the future of Greece in the EU may have driven precious metals prices down. The upcoming report on the core durable goods and jobless claims might continue to play a role in direction of metals. If these reports will be positive metals might continue to trade down. Finally the upcoming German business climate survey might further pull down the Euro since the survey came out negative.
This gold and silver prices 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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