Gold-Currencies Weak in Correlation, Will Gold Switch Direction in a Few Days?
The prices of gold spiked on Thursday as well as the rest of the marketplace such as crude oil, shares and Euro. The latest ECB conference and press meeting that followed might have played a part in this rally. But the following day, gold and silver moved and then dropped. In spite of this zigzag the prices of precious metal marginally increased on a weekly level. A number of news were published last week and probably have impacted gold: China's trade balance report revealed a surge in exports during December; the U.S unemployed reports went up by 4k to reach 371k. The claim on China might have benefited rally commodities prices; the jobless claims likely have dragged down the USD. Can gold as well as silver switch direction and go down in a few days? The following is a brief outlook for January 14th to January 18th; for instance a fundamental analysis of the key report and incidents that could influence gold which includes: U.S CPI, Bernanke's speech, Canada's manufacturing sales, Philly Federal survey, U.S PPI, China's GDP for the 4th quarter, Australia's job report, U.S retail sales, Spain's bond auction, and the U.S. jobless reports.
Precious metal increased throughout last week by 0.71%; on the other hand, during said week, the average price reached $1,660.52 /t.oz which is 0.47% below the previous week's average price. Gold ended the week at $1,660.6 /t.oz.
The Euro also hiked against the U.S dollar by 2.1% (on a weekly level); additionally, other €risk€ currencies for instance the Australian dollar too appreciated against the U.S dollar by 0.52%. The correlations between major currency pairs and gold point out weak in recent weeks: during December to January the correlation between Euro/USD and gold was merely 0.07 and between Australian dollar /USD and gold the correlation was also 0.27. These weak relations shows the recent developments in the forex markets might have had at best just a little effect on the fluctuations in precious metals. These poor correlations, however, may possibly strengthen in the weeks to follow. Hence, in case the Euro and other €risk€ will depreciate during the week, this tends to pull down gold and silver.
In conclusion, perhaps gold and silver will change pace and resume its downward trend. The increase in trading volume will probably lower the value volatility of gold and silver. The coming speech by Bernanke might strongly impact gold and silver. If he will signal the Fed is beginning to plan its exit strategy from the entire QE programs, this will likely adversely affect precious metals. The skepticism around long term measures U.S policymakers will take with regards to the spending cuts and raising the debts cap may also help rally gold in the following weeks. In the event that China's economy are going to spread out by a higher than estimated rate, based on the 4th quarter GDP record, it may favorably change commodities prices. The outlook reports concerning the U.S economy including: Philly Fed index, housing starts, PPI, CPI, retail sales and jobless claims, may affect the USD and bullion prices: if all these reports will present advancement in the U.S economy, they might adversely affect the prices of gold and silver. If the Indian Rupee will remain to appreciate against the USD, as it did previous week, it could pull up the demand for gold in India, among the leading consumers of gold. Lastly, if the Euro, Aussie dollar, Canadian dollar and other risk currencies will change pace and depreciate against the USD, they may as well adversely affect gold.
Precious metal increased throughout last week by 0.71%; on the other hand, during said week, the average price reached $1,660.52 /t.oz which is 0.47% below the previous week's average price. Gold ended the week at $1,660.6 /t.oz.
The Euro also hiked against the U.S dollar by 2.1% (on a weekly level); additionally, other €risk€ currencies for instance the Australian dollar too appreciated against the U.S dollar by 0.52%. The correlations between major currency pairs and gold point out weak in recent weeks: during December to January the correlation between Euro/USD and gold was merely 0.07 and between Australian dollar /USD and gold the correlation was also 0.27. These weak relations shows the recent developments in the forex markets might have had at best just a little effect on the fluctuations in precious metals. These poor correlations, however, may possibly strengthen in the weeks to follow. Hence, in case the Euro and other €risk€ will depreciate during the week, this tends to pull down gold and silver.
In conclusion, perhaps gold and silver will change pace and resume its downward trend. The increase in trading volume will probably lower the value volatility of gold and silver. The coming speech by Bernanke might strongly impact gold and silver. If he will signal the Fed is beginning to plan its exit strategy from the entire QE programs, this will likely adversely affect precious metals. The skepticism around long term measures U.S policymakers will take with regards to the spending cuts and raising the debts cap may also help rally gold in the following weeks. In the event that China's economy are going to spread out by a higher than estimated rate, based on the 4th quarter GDP record, it may favorably change commodities prices. The outlook reports concerning the U.S economy including: Philly Fed index, housing starts, PPI, CPI, retail sales and jobless claims, may affect the USD and bullion prices: if all these reports will present advancement in the U.S economy, they might adversely affect the prices of gold and silver. If the Indian Rupee will remain to appreciate against the USD, as it did previous week, it could pull up the demand for gold in India, among the leading consumers of gold. Lastly, if the Euro, Aussie dollar, Canadian dollar and other risk currencies will change pace and depreciate against the USD, they may as well adversely affect gold.
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