Gold and silver bounced back on the last day of last week but this rally might not last long. According to the recent Chinese GDP report for Q2, China expanded by only 7.6 in annual terms. There are many items of today's agenda including: Euro Area Annual Inflation, U.S. Retail Sales Report and Monetary Policy Meeting Australia's Bank. Currently gold and silver are falling.
Gold rose on Thursday by 1.71% to $1,592; silver also increased by 0.77% to $27.37. During July, gold declined by 0.76% and silver by 0.88%. Furthermore, on Friday the SPDR Gold Shares (GLD) also rose by 1.01% and reached by July 13th 154.14. Currently, GLD is declining.
The chart bellow shows the normalized rates of these precious metals during July (normalized to 100 as of June 15th).
The ratio between the two precious metals rose on Friday to 58.17. During July the ratio edged down by 0.12% as gold slightly out-performed silver.
On Today's Agenda
Euro Area Annual Inflation: The inflation in the Euro Area fell to 2.4% in June (flash report). The upcoming inflation rate estimate will confirm the flash report's growth rate;
U.S. Retail Sales Report: During May, the retail sales slipped by 0.2% from the previous month; gasoline stations sales fell by 2.2% in May;
Monetary Policy Meeting Australia's Bank: The minutes of the monetary policy meeting of the reserve bank of Australia show the main factors that affected the board's decision to keep the basic interest rate at 3.5%; the minutes of this meeting may affect the AUD and consequently gold;
Currencies / Gold & Silver Market - July Update
The euro/US dollar rose on Friday by 0.38% to 1.2249. During the month (UTD) the euro/USD declined by 3.29%. Further, other exchange rates such as the Australian dollar also appreciated on Friday against the USD by 0.86%. There is still a very strong and robust relation between the euro/USD and gold. The linear correlation between gold and the euro/USD is 0.654 (daily percent changes, for the last few weeks). If the euro/USD and AUD/USD will decline, it could pull down precious metals rates. Currently, the euro/USD is declining.
Gold and silver changed direction again and after the recent rally in gold and silver may have stemmed the speculation over the next move of the BOC after the disappointing Chinese GDP report came out. This rally might be short lived as it wasn't based on any fundamental change. Therefore bullion might resume its descent of recent months. The upcoming reports, mainly U.S retail sales, may affect not only U.S stock markets but also forex and commodities markets. If the report will keep showing no growth, it may adversely affect commodities rates. Finally, if the major exchange rates including the euro, Aussie dollar and Canadian dollar will depreciate against the USD, this could adversely affect bullion rates.
For further reading: Gold & Silver | Weekly Outlook July 16-20.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.