Gold and Silver Outlook for October 31-November 4

With the U.S. elections only 8 days away the markets continue to monitor the changes in the possible outcome of these elections – mainly the presidential elections. But before the elections there are several key events and reports that will unfold this week that could move bullion prices. In the U.S. the main event will the NFP report that will come out on Friday; but before that the FOMC meeting will also take place this week. Outside the U.S. there are another 3 rate decisions by BOE, RBA and BOJ. And even though these central banks aren’t likely to rock the boat this time, they could still provide some guidance looking forward. How will these events impact gold and silver? Let’s take a closer look at the bullion market:

After gold and silver taking a beating throughout most of the month of October, they did bounce back last week on the backend of a weaker dollar and despite the ongoing rise in LT interest rates. And even though the recent GDP report for Q3 came out with a higher than expected results – a growth rate of 2.9% compared to an outlook of 2.5% — gold and silver still rallied. This may have also likely to do with the recent developments in the U.S. elections – another October surprise with the FBI letter to congress about Clinton’s emails – which reduces the odds of Clinton wining the Presidential elections. It seems that this development was a risk-off shift that led to a drop in USD and LT interest rates.

This week the markets will keep looking the progress of the U.S. elections: If the odds of a Clinton victory further fall, this could lead to another bounce for precious metals.

Besides the elections the FOMC will also convene again for its penultimate meeting. This time there is no press conference so the focus will be on the statement including the wording and number of dissenters. If the Fed were to provide a much clearer wording for a December hike, this could raise again the implied probability of a rate hike December: As of the end of last week the chances came slightly up to 74%. For November the odds remained low at 8.3%. Besides the FOMC the NFP report for October will also play a role in moving markets: Currently the markets expect a gain of 175K, which is nearly 20K jobs higher than in the previous report. If the report were to show any higher than expected gains, this could bring back down bullion prices as it raises the chances of a December rate hike.

Takeaway

The bullion market will continue to struggle in the short term. Unless the U.S. elections takes another turn of the worse for Clinton, the NFP comes much lower than expected or the Fed turns more dovish than in the previous meeting. If one of these scenarios don’t come to fruition, this could mean additional downward pressure on gold and silver prices.

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