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Guest Commentary: Gold & Silver Daily Outlook 07.20.2012

Guest Commentary: Gold & Silver Daily Outlook 07.20.2012

Lior Cohen: Commodities Analyst,

Bullion changed direction and rose on Thursday after they had declined for three consecutive days. The U.S reports that came out yesterday and showed a mixed signal: the U.S rate of existing home sales declined by 5.4%; US jobless claims also changed direction and rose to 386k; the Philly Fed index slightly rose but was still negative. On today's agenda: Great Britain Net borrowing, and Canada's Core CPI.

Gold price rose on Thursday by 0.61% to $1,580.4; Silver also increased by 0.45% to $27.2. During July, gold declined by 1.48% and silver by 1.43%.

The chart bellow presents the normalized rates of these precious metals during the month (normalized to 100 as of June 29th).

Guest_Commentary_Gold_Silver_Daily_Outlook_July_20_2012_body_Gold_July_20.png, Guest Commentary: Gold & Silver Daily Outlook 07.20.2012

St. Deviation of Bullion

Due to the modest changes in the bullion markets during the month, the volatility of precious metals prices slightly declined during July compared with June's, as the current standard deviations of gold and silver (daily percent changes) are at the lowest level for this year.

The linear correlation of the two precious metals daily percent changes slightly declined during month but is still strong and robust, as indicated in the chart herein. During July the linear correlation of their daily percent changes reached the lowest level since January; this means the two metals' relation has loosen in recent weeks.

Guest_Commentary_Gold_Silver_Daily_Outlook_July_20_2012_body_Correlation__2012_July.png, Guest Commentary: Gold & Silver Daily Outlook 07.20.2012

On Today's Agenda

Canada's Core CPI: According to the Canadian CPI report for May 2012, the CPI rose by 1.2% during the past 12 month up to May – this is a slightly lower rate than in April. This report might affect the Canadian dollar, which is also strongly linked with bullion rates;

Great Britain Net borrowing: this report will show the monthly developments in the public sector net borrowing for June 2012; as of May 2012, the net borrowing reached to £15.6 billion;

Daily Outlook

Bullion may have changed direction and rose along with the rest of the financial markets including oil rates and U.S stock markets. This rally might not last long and precious metals prices might resume their descent. The little improvement in the Philly Fed may have contributed to the rally in commodities rates. The ongoing slowdown in the housing market may have also contributed to the rise in bullion. The Canadian report CPI might affect the Canadian dollar which tends to be linked with bullion.

For further reading:What Are the Main Factors Affecting Gold Price?

By: Lior Cohen, M.A. in Economics, Commodities Analyst and Blogger at Trading NRG

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.