Guest Commentary: Gold and Silver Daily Outlook 09.20.2012
The prices silver and gold didn't do much yesterday again even though there were sharp falls in other commodities markets most notably the drop in oil prices. According to the recent HSBC's flash manufacturing PMI of China declined to 47.8 which mean the manufacturing sector is contracting at a faster pace in China. This new may adversely affect commodities rates during the day. On today's agenda: Philly Fed Manufacturing PMI reports, Philly Fed Manufacturing survey, ECB President Speech, GB Retails Sales, Spanish 10 Year Bond Auction, U.S. Jobless Claims update, FOMC member Lockhart's Speech.
Currencies / Bullion Market – September Update
The Euro/USD remained unchanged on Wednesday at 1.3048. Several other currencies including AUD appreciated against the USD. As seen in the chart below linear correlation among gold, CAD, AUD, and Euro are still mid-strong: during the month, the correlation between gold and EURO/USD was 0.6 (daily percent changes); the correlation between gold and Canadian dollar, -0.72; the correlation between gold and Aussie dollar, 0.63. If the Euro, CAD and AUD will trade down, this could also pull down along with it the prices of bullion.
On Today's Agenda
Philly Fed Manufacturing Index: In the previous August survey, the growth rate increased from -12.9 in July to -7.1 in August. If the index will remain negative it may adversely affect not only U.S Dollar but also American stock indexes, and commodities;
ECB President Speech: Mario Draghi is likely to refer to the recent German Court ruling, and he may also refer to the future monetary steps the ECB will take in order to jump start the EU economy and lower the borrowing costs of the struggling EU economies such as Spain and Italy;
Flash German and Euro Area Manufacturing PMI: In the previous report regarding August, the German PMI rose to 45.1 i.e. the manufacturing conditions are still contracting but at a slightly slower pace. This report will provide an indicator to the economic progress of the Euro zone and the leading economies' manufacturing conditions; this news, in turn, might affect the Euro and consequently bullion;
Today's Spanish bond auction turnout could affect Spain's decision to ask ECB to start its bond purchase program. Today's speech of Mario Draghi could also affect the sentiment towards the Euro if he will refer to the future steps of ECB. Today's publications regarding Euro Area manufacturing PMI, U.S. jobless claims, Philly Fed survey could affect their respective currency if the reports will demonstrate a significant change as indicated above. The speculations around the future steps of People Bank of China to stimulus the economy could keep affecting not only the forex but also commodities. In the meantime China's recent manufacturing report could adversely affect commodities.
For further reading see:Gold and Silver | Outlook September 17-21
By Lior Cohen By: Lior Cohen, M.A. in Economics, Commodities Analyst and Blogger at Trading NRG
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