Both gold and silver resumed their downward trend and tumbled down yesterday. Moreover, the volume of trade has also sharply picked up, which may have stemmed by the publication of several U.S reports, most notably the minutes of the FOMC meeting. Members of the FOMC addressed the FOMC’s policy and discussed the importance of conveying to the public that slowly tapering QE3 (if any when it commences) isn’t linked with the FOMC’s future guidance regarding the progress of the U.S economy and its cash rate decision. The cash rate is likely to remain at its lowest level until the unemployment rate falls below 6-6.5% and the two-year inflation projects remain up to 2.5% annual rate and the and longer-term inflation expectations continue to be well anchored. This news may have contributed to the drop in gold and silver prices yesterday. Moreover, the recent CPI monthly updated showed a 0.1% drop in the monthly inflation and the core CPI inched up by 0.1% – the annual rate remained only 1.7%. Therefore, for now, it seems the low inflation and high unemployment won’t change the Fed’s policy on its cash rate anytime soon. In other news, existing home sales in the U.S fell during October; retail sales in October slightly rose by 0.4%. These reports suggest little progress in the U.S economy. Finally, China’s flash manufacturing PMI fell to 50.4 – the manufacturing sectors are growing at a slower pace. This news may have pressured down commodities prices. Will gold and silver continue to fall today? On today’s agenda: Governor Stevens speaks, Flash German, French and Euro Zone Manufacturing PMI, U.S. Jobless Claims, U.S. Producer Price Index, Philly Fed Manufacturing Index.
Here is a short review for precious metals for Thursday, November 21st:
Gold and Silver – November Review
On Wednesday, gold changed direction and fell by 1.22% to $1,258; Silver declined again by 1.36% to $20.06 – its lowest rate since the beginning of August 2013. During November, gold decreased by 4.96%; silver, by 8.13%. In the chart below are the normalized prices of gold and silver for 2013 (normalized to 100 as of October 31st). The prices of gold and silver have tumbled down during the month.
The ratio between the two precious metals rose again on Wednesday to 62.72. During November, the ratio rose by 3.45% as silver has moderately under-performed gold.
The gold and silver futures volumes of trade have sharply increased yesterday and reached 259 thousand and 81 thousand, respectively.
On Today’s Agenda
Philly Fed Manufacturing Index: In the last survey regarding October, the growth rate fell from +22.3 in September to +19.8 in October. If the index continues to fall, it may adversely affect not only U.S Dollar but also U.S equity markets and commodities (the recent Philly Fed review);
Flash German, French and Euro Zone Manufacturing PMI: In the last monthly report regarding October 2013, the Germany’s PMI inched up to 51.5 i.e. the manufacturing conditions are growing but at a slightly faster pace. France’s PMI inched down to 49.4. This report serves signals to the developments in the Euro Area’s manufacturing conditions; this news, in turn, may affect the Euro/USD currency pair and consequently commodities prices;
Governor Stevens speaks: Reserve Bank of Australia Governor is due to deliver a speech titled “The Australian Dollar: Thirty Years of Floating” at the Australian Business Economists Annual Dinner, in Sydney; this speech may affect the Aussie dollar;
U.S. Jobless Claims Weekly Report: In the recent report the jobless claims slipped by 2k to reach 339k; the next weekly report may affect the U.S dollar and consequently commodities and equities markets;
U.S. Producer Price Index: In the last report regarding September, this index for finished goods slightly fell by 0.1% compared with Augusts’ level and the core PPI inched up by 0.1%; this news might affect the USD;
Currencies / Precious Metals Correlations – November Update
On Wednesday, the Eur/USD currency pair also fell by 0.73% to 1.3439. During November, the Eur/USD slipped by 1.07%. Further, other currencies such as the Aussie dollar also depreciated yesterday against the U.S dollar by 1.06%. The correlations among gold, silver and Euro remained strong in recent weeks, e.g. the correlation between the Euro/USD and gold price is 0.74 during October/November.
Here is a reminder of the main events and publications that are scheduled for today and tomorrow (all times GMT):
Today
09:00 – Flash German, French and Euro Zone Manufacturing PMI
09:05 –Governor Stevens speaks
13:30 – U.S. Jobless Claims
13:30 – U.S. Producer Price Index
15:00 – Philly Fed Manufacturing Index
Tomorrow
09:00 – German Ifo Business Climate Index
13:30 – Canada CPI
13:30 – Canada Core Retail Sales
For further reading:
- Gold and Silver Outlook for November 2013
- Gold and Silver Weekly Forecast for November 18-22
- Weekly Outlook of Financial Markets for November 18-22
- Gold and Silver Yearly Outlook For 2013
- Is the Golden Era of Gold Over?