Gold and Silver - Daily Outlook for October 17th

The highly anticipated debt ceiling breach didn’t come as President Obama was able to pass in both houses the vote to raise the debt ceiling and partly fix the budget by reopening the government until mid-January. The debt ceiling will last until February 7^th. For now, crisis averted but the damage has already been made as people continue to lose confidence in U.S policymakers. This news is likely to help pull up U.S stock market for the short term but at the beginning of the year these issues will resurface and adversely affect market sentiment and confidence. This recent development could reduce the high volatility in the financial markets including precious metals and could resume the downward trend of precious metals. On today’s agenda: Euro Area Current Account, U.S. Jobless Claims, Philly Fed Manufacturing Index, Governor Stevens speaks, China Third Quarter GDP 2013, and China’s Industrial Production.

Here is a short overview for precious metals for Thursday, October 17th:

Gold and Silver Prices Review – October Update

On Wednesday, gold bounced back and rose by 0.71% to $1,282.0; silver also rallied by 0.82% to $21.34. During October, gold decreased by 3.38%; silver, by 1.59%. In the chart below are the normalized prices of precious metals for 2013 (normalized to 100 as of September 30^th). The prices of gold and silver have slightly declined in the past couple of weeks.

The ratio between the two precious metals slipped on Wednesday to 60.08. During October, the ratio decreased by 1.81% as silver has slightly out-performed gold.

On Today’s Agenda

Euro Area Current Account: Last month’s report showed the gap in value between imported and exported goods, services, income flows, and unilateral transfers reached 16.9 billion Euros. This report could also indicate change in the progress of the EU economy;

U.S. Jobless Claims Weekly Report: In the previous report the jobless claims sharply rose by 66k to reach 374k; the next weekly update may affect the U.S dollar and consequently commodities and equities markets;

Philly Fed Manufacturing Index: This monthly survey estimates the growth of the US manufacturing sectors. In the recent survey regarding September, the growth rate fell from +9.3 in August to +22.3 in September (the recent Philly Fed review);

Governor Stevens speaks: Reserve Bank of Australia Governor is due to speak at the Australian British Chamber of Commerce Business Lunch, in Sydney; in his upcoming speech, the Governor may refer to the progress of the Australian economy and RBA’s monetary policy; this speech may affect the Australian dollar;

China Third Quarter GDP 2013: In the second quarter of 2013, China grew by only 7.5% in annual terms; China’s economy grew by 7.7% in the first quarter of 2013. The current expectations are that the second quarter of 2013 grew in annul terms by a slower rate than in the previous quarter; if the growth rate further dwindles, this may adversely affect commodities prices;

China’s Industrial Production: According to last month’s report, China industrial production grew to an annual rate of 10.4%; if the growth rate further rises, it may suggest China’s economy is progressing faster;

Currencies / Precious Metals– October Update

On Wednesday, the Euro/ USD currency pair inched down by 0.07% to 1.3534. During October, the Euro/USD slightly rose by 0.34%. Moreover, other currencies such as the Canadian dollar and Aussie dollar slightly appreciated yesterday against the U.S dollar by 0.27% and 0.53%, respectively. The correlations among gold, silver and Aussie dollar strengthened in the past couple of weeks, e.g. the correlation between the AUD/USD and gold price is -0.60 during September/ October.

Here is a reminder of the main events and publications that are scheduled for today and tomorrow (all times GMT):

Today

09:00 – Euro Area Current Account

13:30 – U.S. Jobless Claims

15:00 – Philly Fed Manufacturing Index

02:00 –Governor Stevens speaks

03:00 –China Third Quarter GDP 2013

03:00 –China’s Industrial Production

Tomorrow

Tentative – Bank of Japan’s Kuroda Speaks

13:00 – Canada’s core CPI

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