Gold and Silver – Daily Outlook for October 31st

The FOMC’s meeting ended with no dramas and it was decided to keep the monetary policy unchanged. Gold and silver recovered from their recent slump and slightly rose yesterday. In U.S news, the consumer price index for September inched up by 0.2% and core CPI by 0.1%. ADP estimates the U.S. non-farm payroll grew by 130k in October. This isn’t a high number and it will likely to be the benchmark for this month’s employment report. The moderate inflation rate and little progress in the U.S labor market is likely to the FOMC’s asset purchase program unchanged in the near future. Will gold and silver continue to rally? On today’s agenda: U.S. Jobless Claims and Canada’s GDP.

Here is a short overview of bullion prices for Thursday, October 31st:

Gold and Silver – October Review                             

On Wednesday, gold rose by 0.30% to $1,349.3; Silver also rallied by 2.35% to $22.98. During October, gold increased by 1.70%; silver rose by 5.99%. In the chart below are the normalized rates of precious metals for 2013 (normalized to 100 as of September 30th). The prices of gold and silver have rallied during the month.

Gold and silver Chart 2013  October 31The ratio between the two precious metals slightly declined on Wednesday to 58.71. During October, the ratio decreased by 4.05% as silver has slightly out-performed gold.

Gold  to silver ratio Chart 2013  October 31FOMC left policy unchanged

As expected, the FOMC left its policy unchanged in its penultimate meeting for the year. This time, the meeting didn’t follow with a press conference.

The Fed maintained its tone about looking for improved economic outlook to taper QE3:

“. In judging when to moderate the pace of asset purchases, the Committee will, at its coming meetings, assess whether incoming information continues to support the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective.”

The FOMC also suggested it will consider additional other reports to measure the progress in the labor market and the inflation.

“In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. “

The FOMC’s decision to keep its policy unchanged was expected and the financial markets didn’t react to this news. Gold and silver slightly rose and the USD mostly appreciated against several leading currencies.

The table below presents the precious metals market’s reaction to the FOMC statements in the past couple of years.

FOMC statment and Gold Silver October 31On Today’s Agenda

U.S. Jobless Claims:  In the last report the jobless claims decreased by 12k to reach 350k; this forthcoming weekly report may affect the U.S dollar and consequently precious metals markets;

Canada‘s GDP by Industry: In the previous update regarding July 2013, the real gross domestic product increased by 0.6%. This report may affect the Canadian dollar, which is strongly linked with commodities prices such as oil and gold;

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


13:30 – U.S. Jobless Claims

13:30 – Canada’s GDP by Industry


01:30 – Australia’s PPI

02:00 – China Manufacturing PMI

02:45 – HSBC’s China Manufacturing PMI

09:30 – GB Manufacturing PMI

15:00 – U.S. Manufacturing PMI

For further reading: