Week Ahead (25 - 29 February, 2008)
Gold prices move in tandem with oil prices, i.e. whatever oil prices do gold follows it. Moreover, gold prices generally move in the opposite direction of the U.S dollar. As the U.S dollar falls, the investors are more attracted towards the precious metals seeking it as an alternative investment and thereby pushing the prices up. Here our focus is on the economic data from U.S, as gold and the U.S dollar share almost an 80% negative correlation.
February 25, 2008 - At 14:50 GMT, we have the Federal Reserve Governor and FOMC voting member Randall Kroszner speaking about risk management at the Global Association of Risk Management Professionals Annual Risk Convention, in New York. Some volatility in the U.S dollar pairs is expected as the traders try to scrutinize his speech for some clues regarding the future monetary policy. Volatility in gold prices is also expected.
At 15:00 GMT, we have the existing home sales figures from the U.S. It measures the annualized number of existing residential buildings that were sold during the previous month. A rising trend has a positive effect on the nation's currency. It is expected to print 4.80M, lower compared to the previous of 4.89M. Traders watch this report closely as it's the month's first demand-side housing indicator to be released. According to the estimates, we might see the U.S dollar weaken and thereby gold prices advance.
At 20:30 GMT, we have the Federal Reserve Governor and FOMC voting member Fredric Mishkin speaking about stabilizing inflation at the East Carolina University's Beta Gamma Sigma Distinguished Lecture Series, in North Carolina. Some volatility in the U.S dollar pairs is expected as the traders try to scrutinize his speech for some clues regarding the future monetary policy. Volatility in gold prices is also expected.
February 26, 2008 - At 13:30 GMT, we have the Producer Price Index (PPI) figures from the U.S. PPI measures the rate of inflation (i.e., the rate of price changes) experienced by manufacturers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. It is expected to print 0.4% better compared to the previous of -0.3%. Whereas, the core PPI which is a derivative of PPI that excludes the Food and Energy items, is expected to print unchanged from the previous at 0.2%. PPI being highly regarded, and at extremes will have a market impact equal to that of its CPI counterpart. According to the estimates, we might see the U.S dollar advance and thereby gold prices decline.
At 15:00 GMT, we have the consumer confidence and the national HPI composite 20 figures from the U.S. The consumer confidence, which measures the mood of consumers in regard to economic conditions, is expected to print lower at 82 compared to the previous of 87.9. Whereas, the S&P/Case-Shiller US National Home Price Index (HPI) Composite-20 measures the annual change in the average price of a single-family home in 20 metropolitan areas, is expected to print -9.9% worse compared to the previous of -7.7%. All in all, we might see the U.S dollar decline and gold prices advance.
At 17:15 GMT, we have the Federal Reserve Vice Chairman and FOMC voting member Donald Kohn speaking about the US economy and monetary policy at the University of North Carolina Cameron School of Business, in North Carolina. FOMC voting members are responsible for setting the nation's short term interest rate, so traders scrutinize their speeches closely for clues regarding future monetary policy. Volatility in gold prices is also expected.
February 27, 2008 - At 13:30 GMT, we have the durable goods orders figures from the U.S. It measures the total value of new purchase orders placed with domestic manufacturers for hard goods with a life expectancy of more than 3 years, such as automobiles, computers, appliances, and airplanes. A rising trend has a positive effect on the nation's currency because an increased level of purchase orders signals that manufacturers will be busy in the months to come as they work to fill the orders. Traders watch this indicator closely because of its predictive abilities. It is expected to print -4% worse compared to the previous of 5%. While the core, which excludes the transportation components, is expected to print -1.4% lower compared to the previous of 2.3%. All in all, we might see the U.S dollar weaken and gold prices advance.
At 15:00 GMT, we have the Federal Reserve Chairman Ben Bernanke testifying about the Monetary Policy Report before the US House of Representatives Committee on Financial Services, in Washington DC. Heavy market volatility is often experienced during Bernanke's speeches as traders attempt to decipher his clues. We also have the new home sales, measures the annualized number of new residential buildings that were sold during the previous month, which is expected to print 600K lower compared to the previous of 604K. According to the estimates, we might see the U.S dollar decline and gold prices advance.
February 28, 2008 - At 13:30 GMT, we have the Preliminary GDP Annualized and GDP Deflator Annualized figures from the U.S. The GDP annualized is expected to print 0.7% compared to the previous of 0.6%, whereas the GDP deflator is expected to print unchanged from the previous at 2.6%. All in all, we can see the U.S dollar advancing and gold prices declining.
February 29, 2008 - At 13:30 GMT, we have the Core PCE Price Index and Personal Spending figures from the U.S. The price index is expected to print 0.3% better compared to the previous of 0.2%. And the personal spending is expected to remain unchanged from the previous at 0.2%. All in all, we might see the U.S dollar advancing and gold prices declining.
At 14:45 GMT, we have the National Association of Purchasing Managers (NAPM) Chicago Purchasing Manager's Index (PMI) from the U.S It measures the health of the Chicago business environment. It's derived from a monthly survey of purchasing managers where respondents indicate whether their organization's activity is higher than, the same as, or lower than the previous month for output, purchases, employment, inventories, orders, and prices. An index reading above 50 indicates sector expansion. It is expected to print lower at 49.4 compared to the previous of 51.5. According to the expectations, we might see the U.S dollar decline and gold prices advance.
At 15:00 GMT, we have the consumer sentiment figures from the U.S. It is expected to print 70, better compared to the previous of 69.6. According to the expectations, we can see the U.S dollar advance and gold prices decline.