Gold and silver shifted again and finished yesterday up. During the past eight business days the prices of precious metals shifted on a daily basis from gains to losses. Precious metals’ recent rally coincided with the rise in other related markets such as oil, Euro and stocks. According to the recent U.S jobless claims report the number of claims declined by 41k to 410k as of the week of November 17th; this news may have contributed to the rise in the USD during yesterday. Today, the U.S markets will be closed on account of Thanksgiving. Therefore the trading will only be in Europe and Asia. Moreover, the reports that will be published today will refer to the Europe. EU ministers will convene again in order to try and progress the bailout for Greece. Currently, the prices of gold and silver are slightly increasing. On today’s agenda: Flash German, French and Euro Area Manufacturing PMI, European Economic Summit Meeting, and Spain’s 10 Year Bond Auction.
Here is a short outlook for precious metals for Thursday, November 22nd:
Precious Metals –November Update
On Wednesday, the price of gold rose by 0.34% to $1,729.4; Silver price also increased by 1.29% to $33.36. During the month, gold rose by 0.6%; silver, by 3.22%.
As seen below, the chart presents the developments in the normalized prices of precious metals during the month (normalized to 100 as of October 31st). Despite the sharp shifts in the prices of precious metals during recent days, they are still slightly up from their initial level from the beginning of the month.
The ratio between the two precious metals declined on Wednesday to 51.85. During November, the ratio declined by 2.53% as gold has under-performed silver.
On Today’s Agenda
Flash German, French and Euro Area Manufacturing PMI: In the previous report regarding October 2012, the German PMI declined to 45.7 i.e. the manufacturing conditions are contracting at a slightly faster rate. This report serves as an indicator to the economic development of the Euro Area’s leading economies’ manufacturing conditions; this news, in turn, may affect the Euro and consequently commodities;
European Economic Summit Meeting: This will be a two day meeting, in which the European Council that includes the EU ministers of finance will discuss the recent monetary developments in Europe; this could include additional talks regarding Greece’s bailout funds that have yet to reach an end. Based on the recent talks, it is likely that there won’t be much progress in this meeting. This could lead to further weakening the Euro.
Spanish 10 Year Bond Auction: the Spanish government will issue its monthly bond auction; in the recent bond auction, which was held during October, the average interest rate reached 5.46% – the lowest rate in previous months; if the rate will continue to fall, it could suggest some regained confidence the EU in general and Spain in particular.
Currencies / Bullion Market – November Update
The Euro/ USD rose again on Wednesday by 0.1% to 1.283. During the month, the Euro/USD declined by 1%. Alternatively, some currencies such as Aussie dollar depreciated during yesterday against the USD by 0.19%. As seen in the past, the correlations among gold, Euro and Aussie are still mid-string and robust: during the month, the linear correlation between gold and Euro /USD reached 0.53 (daily percent changes); the linear correlation between the gold and Euro /USD was 0.49 (daily percent changes). Thus, if the Euro and other risk currencies will change direction and dwindle against the USD, they are likely to pull down affect gold and silver.
Current Gold and Silver Rates as of November 22nd
Gold (short term delivery) is traded at $1,729.4 per t oz. a $1.2 or 0.07% increase as of 23:05*.
Silver (short term delivery) is at $33.45 per t oz – a $0.01 or 0.03% increase as of 23:05*.
Daily Outlook for November 22nd
The prices of gold and silver changed direction again and rose. They seem to continue seeking direction along with other commodities prices such as crude oil. This rally, however, might change direction especially if the Euro and other risk related currencies will trade down against the USD. Today’s vacation in the U.S will result in no trading in COMEX or NYSE. This means, most of the trading will continue in European and Asian markets. The upcoming reports regarding German, French and Euro Area manufacturing PMI could have a positive effect if the PMI will pass the 50 point mark. Today’s EU Summit might also affect the forex market if there will be any decision regarding the Greek bailout. My guess, however, there will be little progress on this front. In such a case, it could further bring down the Euro and consequently precious metals prices.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
08:30 – Flash German, French and Euro Area Manufacturing PMI
All Day – European Economic Summit Meeting – First Day
Tentative – Spanish 10 Year Bond Auction
All Day – European Economic Summit Meeting – Second Day
09:00 – German Business Climate Survey
13:00 – Canada’s CPI
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