Gold and silver prices tumbled down during the last couple of days of last week: the ECB rate cut decision and the disappointing U.S employment report may have been among the key factors dragging down bullion rates. Will this downward trend continue during this week? On today's agenda: ECB President Draghi will give a speech and BOC Business Outlook Survey will come out.
Precious Metals - July Update
Gold decreased on Friday by 1.9% to $1,578.9; silver also tumbled down by 2.71% to $27.67. During July, gold declined by 1.58% and silver by 2.51%. Furthermore, on Friday the SPDR Gold Shares (GLD) also fell by 1.26% and reached by July 6th 153.71. Currently, GLD is declining by nearly 0.1%.
The chart below presents the normalized prices of these precious metals during the past several weeks (normalized to 100 as of June 15th).
On Today's Agenda
ECB President Draghi's Speech: Following the recent ECB's rate reduction by 0.25 percent point to 0.75%, the President of ECB, Mario Draghi will give a speech; in his speech he may refer to the recent events in Europe and ECB's monetary policy; if there will be big headlines coming out of this speech it could affect the forex and commodities markets;
BOC Business Outlook Survey: this quarterly report examines Canada's businesses and offers some insight of what is up ahead for Canada;
Currencies / Gold & Silver Market - July Update
The euro/USD declined on Friday by 0.82% to 1.229. During the month (UTD) the euro/USD fell by 2.97%. Further, other exchange rates such as the Aussie dollar also depreciated on Friday against the USD by 0.74%. There is still a very strong linear correlation among euro/USD gold and silver. The linear correlation between gold and euro/USD is 0.619 (daily percent changes, for June/July). If the euro/USD will continue to trade down, it could pull down bullion rates.
Daily Outlook for July 9th
Gold and silver declined during the last couple of days of last week and may continue with their downward trend during this week. Today there aren't too many items on the agenda so that we might see little movement in the financial markets. The growing demand for U.S Treasuries is likely to signal the markets are becoming more risk averse and thus could also indicate bullion rates will remain at their current range. The rise in Spanish yields to above 7% (for ten year bonds) is another indication for the declining faith investors have in the EU. If the euro/USD will continue to dwindle it might drag down along with it precious metals.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.