Gold and silver prices continued to move upwards as both precious metals edged up on Thursday. These metals rose despite the decline of the Euro and perhaps due to the appreciation of other “risk currencies” including Aussie dollar and Canadian dollar. The recent U.S reports didn’t seem to have much of an effect on the financial markets: U.S jobless claims declined 6k to 361k; U.S trade balance deficit (goods and services) declined to $42.9 billion in June 2012. This news may have contributed to the appreciation of the USD.
Gold edged up again on Thursday by 0.26% to $1,620.2; Silver rose by 0.08% to $28.10. During the month, gold edged up by 0.35%; silver, by 0.66%
This entire week, commodity prices played around the following lines-
Great Britain PPI input- UK Producers Price Index for Input Prices rose by 1.3 per cent in July in monthly terms up from a revised 2.9 per cent decrease in June, while the PPI Input Prices annually fell by 2.4 per cent in July up from a revised 3 per cent decrease in June, according to the Office of National Statistics. The monthly PPI input prices increased less than the expected 1.5 per cent increase and annually dropped more than the forecast at 1.50 per cent decrease. Furthering this, precious metals edged up.
US Federal Budget Balance- Uncertainty over whether the US Federal Reserve and European Central Bank will take further steps to boost their economies has so far deterred a stronger move in gold prices, and bullion remains below last September’s record high at around $1,920 an ounce. Should the Fed signal it intends to implement a third round of monetary easing at the next meeting, it would probably boost precious metals, which are seen as a hedge against inflation.
Chinas trade Balance- China’s General Administration of Customs said exports grew just one percent in July year-on-year to $176.9 billion, while imports rose 4.7 percent to $151.8 billion, cutting the trade surplus to $25.1 billion from $31.7 billion in June.
The data follow results on Thursday showing Chinese retail sales, industrial output and inflation eased in July, indicating the export-driven economy was feeling the effects of Europe’s debt crisis lowering demand in the key market.
China New loans- China's new loans in July came in at 540 billion yuan, a weaker reading than the 920 billion yuan from June. The latest data missed analysts' estimates of 701 billion yuan. This resulted in an upward movement in gold.
The U.S federal budget report signalled the progress of the U.S economy and, in turn, affected the USD and commodities prices. The Canadian employment report affected the Canadian dollar that tends to be linked with bullion rates. The Chinese reports also affected commodities prices as they have shown a sharp change. These reports have shown a decline in trade activity and new loans which in turn suggested that China’s economy is slowing down and this slow groth has adversely affected bullion rates.
Finally, the ongoing decline of the Euro during the week could continue to curb the rally of bullion rates, while the rise in Aussie dollar and other “risk currencies” is contributing to the recovery of precious metals prices.
With a lack of major, market-moving fundamental news this week, precious metals market watchers are focusing more on the key outside markets. The U.S. dollar index was higher in Thursday, which did limit the upside in the precious metals. Meantime, crude oil prices were slightly higher on Thursday, which did somewhat limit selling pressure in gold and silver. Oil bulls have upside near-term technical momentum after prices Wednesday hit a 2.5-month high. The precious metals markets will continue to look closely at how these two key “outside markets” trade on a daily basis.
In the Indian markets, there was a news leak of increase in duty on gold. However these were rumors and nothing concrete has been announced yet.
Onset of the festive season has seen rise in demand but it is comparatively low. High gold prices and economic turmoil are creating this slug.
Mean while, Gold and silver are still zigzagging with an unclear trend as they haven’t shifted from their respective price range.
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