Guest Commentary: Gold & Silver Daily Outlook 09.07.2012
The prices gold and silver resumed their rally, much like the U.S stock market. Further, the rise of major foreign exchange rates including the Euro Aussie dollar and Canadian dollar against the USD may have also contributed to the recovery of bullion rates. Today the U.S non-farm payroll report will be published. It usually has a clear and substantial effect on the commodities, stocks and forex markets. Some estimate the number of jobs added will reach nearly 140k for August. According to ADP the number of jobs added was 201k. Several reports and headlines came out yesterday that may have affected the markets yesterday: U.S jobless claims declined by 12k to reach 365k. ECB left the rate unchanged at 0.75%, but the President of ECB introduced his bond purchase plan. The plan could help countries such as Spain and Italy in raising debt. There are several other news items of today's agenda including: Great Britain Manufacturing Production, Great Britain PPI Input, Chinese CPI and Canada's Employment Report.
On Today's Agenda
U.S. Non-Farm Payroll Report: in July, the number of non-farm payroll employment rose by 163k; the U.S unemployment rate reached 8.3%; if the upcoming report will continue to show growth of above 120 thousand (in additional jobs), this may lower the chances of the Fed introducing additional stimulus plan in 2012; this report may affect not only the U.S dollar, but also bullion prices; the table below shows the relation between gold silver Euro and the changes in employment in the U.S. in the last couple of times, the relation seems to have shifted from a negative relation to positive.
Canada's Employment Update: In the recent employment report for July, unemployment edged up to 7.3%; the employment fell by 30k during the month. The upcoming report might affect the Canadian dollar and consequently the prices of commodities;
Chinese CPI: during July the Chinese inflation rate declined to an annual rate of 1.8%; this rate is well below China's inflation target of 4% in annual terms. If the inflation will continue to dwindle it could indicate that China's economic progress continues to slow down; China is among the leading countries in importing commodities;
Precious metals resume their recovery yesterday and may continue on this path during the day. The upcoming non-farm payroll report might be even better than last month's figures. In such a case, it is likely to rally the markets including stocks and commodities. On the other hand, the news of India's consideration to raise import tax could adversely affect the prices of precious metals. India is the world leading importer of gold. Today's Great Britain Manufacturing Production and PPI Input might have a modest effect on the British Pound. Finally, if the Euro and other "risk currencies" will further rise during the day they could pressure up precious metals.
For further reading: Gold and Silver Monthly Outlook for September
By: Lior Cohen, M.A. in Economics, Commodities Analyst and Blogger at Trading NRG
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