The prices gold and silver declined yesterday and thus since September 14th, following the announcement of the FOMC to launch QE3, the price of silver fell by 2.07% and gold by 1.08%. The same goes for the Euro and other "risk currencies" that have also declined in the past couple of weeks. The recent developments in Spain and Greece may have contributed to the weak Euro. This news may have helped rally some commodities prices. The U.S new home sales edged down in August by 0.3%. On today's agenda: U.S Core Durable Goods, U.S GDP second quarter (Update: U.S GDP rose by only 1.3% in Q2), U.S. Pending Home Sales, Great Britain Current Account, China's revised Manufacturing PMI, Italian 10 Year Bond Auction, Euro Area Monetary Development and U.S. Jobless Claims.
As seen below, the chart shows the shifts of normalized prices of precious metals during September (normalized to 100 as of August 31st). During the past couple of weeks the rates of gold and silver have slightly declined.
On Today's Agenda
U.S Core Durable Goods: This report may indirectly show the changes in U.S. demand for commodities such as crude oil. As of July 2012, new orders of manufactured durable goods rose by $9.4 billion to $230.7 billion; if this report will continue to be positive then it could pull up not only the USD but also commodities;
U.S GDP 2Q 2012: In the recent estimate the U.S GDP in the second quarter grew by 1.7%; in the 1Q2012 the GDP growth rate was 1.9%. This shows a decrease in the growth rate for the US's GDP. If there will be a sharp shift in this estimate it could also affect not only the US dollar but also commodities.
China's revised Manufacturing PMI: according to last week's HSBC Manufacturing PMI flash report for September 2012 the Manufacturing PMI edged up to 47.8, which means the manufacturing conditions are still contracting; if this negative index will continue, this may adversely affect commodities, unless China will act to stimulate its economy;
The recent riots in Spain and Greece regarding he budget cuts and political uncertainty is likely to keep the Euro weak and thus could also adversely affect bullion rates. Today's Italian bond auction might partly ease the recent bearish market sentiment in the Euro Area if the auction will go well. China's manufacturing PMI could affect commodities prices: if the report will continue to fall and will be below the 50 mark it could adversely affect commodities unless China will hint of its intent to add additional stimulus. Today's publication of U.S Jobless Claims, core curable goods, pending home sales and GDP for Q2 could affect the USD as indicated above.
For further reading: How will a Greek Exit Affect Gold and Silver?
By: Lior Cohen, M.A. in Economics, Commodities Analyst and Blogger at Trading NRG
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