Guest Commentary: Gold & Silver Daily Outlook 06.07.2012
Gold and silver sharply increased yesterday along with other commodities and major foreign exchange. Yesterday it was reported the Australian GDP expanded by a higher than expected rate. This news positively affected not only the Aussie dollar but also precious metals. The ECB kept the interest rate unchanged. Bernanke will testify before the Senate. If there will be big headlines coming out of this testimony, it could affect forex and metals markets. On today's agenda: U.S Jobless Claims, BOE will announce its decision on the interest rate, Australian Trade Balance and Swiss National Bank Forex Reserves.
The chart below presents the normalized rates of these metals during the past couple of weeks (normalized to 100 as of May 15th). It shows that both metals rates reached a similar price rise in the past three weeks.
On Today's Agenda
Bernanke's Testimony: This will likely be the main event of the day. Following the recent disappointing U.S employment report, more people think this will trigger the Fed to lean towards another stimulus plan. Bernanke will testify before the Joint Economic Committee in the U.S Senate. The title of his speech is "Economic Outlook and Policy"; if Bernanke will consider the recent U.S economic developments as a turn for the worst, it could signal that the Fed might consider another monetary intervention; in such a case it could pressure up bullion. If the testimony won't present any new developments in the Fed's perspective or its monetary policy, then this could be just another storm in a teacup.
U.S. Jobless Claims Weekly Report: in the latest update the jobless claims rose by 10k to 383,000; this upcoming weekly report may affect the U.S dollar and consequently bullion rates;
Currencies / Bullion Market – June Update
The Euro/USD spiked yesterday by 1.03% to 1.2581. The decision of ECB to keep rates unchanged and the speculations around the possibility of Germany agreeing to Euro bonds may have also contributed to the rally of Euro/USD. Furthermore, other exchange rates such as the Aussie dollar and Canadian dollar also sharply appreciated. For the Australian dollar, the higher than expected growth rate of its GDP in Q1 may have also helped it rally. If the USD will continue to depreciate against these currencies, it may further push up bullion.
Daily Outlook for June 7th
The upcoming testimony of Bernanke might also affect the USD and bullion if he will bring some new headlines. If there will be additional hints of a possibility of another stimulus plan, it could pressure up gold and silver. Otherwise bullion traders won't be influenced from his speech. If the US jobless claims will show sharp shifts, it could also affect not only the US dollar but also precious metals.
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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