Gold and silver prices continued their upward trend and moderately increased yesterday despite the drop in commodities prices. The Euro and Australian dollar sharply depreciated against the US dollar. Currently, gold and silver are traded slightly down. Today, the American non-farm employment report (update: US labor is up 200k) will be out and some expect it will show a sharp gain in employment; the Canadian employment report will also be released today.
Here is a market outlook of precious metals prices for today, January 6th:
Gold and Silver Prices –January Update
Gold price rose on Thursday by 0.46% to $1,620.1; silver price also rose by 0.68% to reach $29.30. In the chart below are the normalized gold and silver prices during recent weeks (normalized gold and silver prices to December 23rd 2011). During January gold price increased by 3.4% and silver price by 4.9%.
The U.S. non-manufacturing PMI, an index that estimates the economic activity in the U.S. non-manufacturing sector, grew from 52% in November to 52.6% in December i.e. a 0.6 percent points increase. This means that not only the US non-manufacturing sector is growing, but also it is growing by a slightly faster pace in December than in November. This may have been among the factors to help pull down the risk currencies against the U.S. dollar.
U.S. Initial Claims Fell Last Week
According to the recent U.S. jobless claims weekly report there was a decrease in initial claims of 15,000 for the week ending on December 31st to reach 372,000 claims (seasonally adjusted data); the number of insured unemployment reached 3.595 million, a decrease of 22,000 compared with the previous week’s figure; furthermore, the four week average fell by 1,000 to 3.601 million. This news may have affected the currency forex trading during yesterday’s trading and may have helped with the appreciation of the US dollar.
On Today’s Agenda
U.S. Non-farm Employment Report: in the December report regarding November, the labor market continues to rally as the number of non-farm payroll employment rose by 120k; the U.S unemployment rate slipped to 8.6%; the last report showed improvement from the previous months, and may have traded down gold and silver during the first days of December (see chart below for further details; for the complete analysis see in the January 2012 gold and silver monthly report). This report could affect not only the U.S dollar, but also gold and silver prices (see my last review on the U.S labor report).
Canada Employment Report: In the last employment report for November 2011, unemployment rose by 0.1 percent points to 7.4%; the employment declined by 19k. If the upcoming report will continue to show a slowdown in the labor report in during December, this might weaken the Canadian dollar against the USD and consequently might affect the prices of commodities as Canada is a lead exporter of commodities to the U.S (see here previous report);
Forex Trading / Gold & Silver Prices – January
The Euro to U.S Dollar sharp decreased again for the second consecutive day, yesterday by 1.21% to reach 1.2788; other forex exchange rates such as the Australian dollar also sharply depreciated against the U.S dollar. If major currencies will continue to depreciate against the U.S. dollar, it may also affect gold and silver prices to change direction and decline.
Current Gold and Silver Prices January 6th
The major precious metals are currently traded slightly down in the American markets:
Current gold prices per ounce short term future (February 2012 delivery) is traded at $1,620.10 per t oz. as of 16:07*.
Current silver prices per ounce short term future (February 2012 delivery) is at $28.845 per t oz – a $0.451 or 1.54% decrease as of 16:04*.
Gold and Silver Prices Outlook
Gold and silver continued to trade up yesterday, but might change direction and decline today if the U.S. employment report will show a substantial increase in the U.S. employment; furthermore, I speculate that if the “risk currencies” including the Australian dollar and Euro will continue to depreciate against the US dollar, it will eventually catch up with gold and silver prices and pull them down. On the other hand, if the U.S. stock markets will continue to trade up, it may help keep gold and silver prices up.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
12:00 – Canada Unemployment Rate and Employment Report
13:30 – U.S. Unemployment Rate & Non-farm Employment Change
For further reading:
- Gold and Silver Prices Outlook for January 2012
- Gold and Silver Prices Weekly Outlook for January 2-6
- Weekly Outlook for 2-6 January
- Where are Gold and Silver Headed in 2012?
About the Author: Lior Cohen, M.A in Economics, a commodities analyst and blogger at Trading NRG.