Gold and silver changed course again and plummeted on Thursday. This time nearly erased all their gain from Wednesday. This erratic behavior is likely to continue today especially as the NF payroll report is released. The ADP estimated 215k jobs were added to the private sector during October. So this number is likely to be one of the benchmarks for today’s NF payroll report. This report is also the last significant report that will be released before the upcoming FOMC meeting on December 17-18. In the meantime, ECB left its cash rate unchanged at 0.25%; in the U.S, jobless claims plummeted again by 23k to reach 298k – its lowest level in months. The U.S GDP grew by 3.6% during the third quarter of 2013. This is the second estimate. It is also higher than the initial estimate which was 2.8%. In the second quarter the growth rate was 2.5%. These reports were very positive signs of growth and thus may have contributed to the rally of USD and the drop of gold and silver. On today’s agenda: Switzerland’s CPI, German Factory Orders, Canada’s Employment Report, U.S. Non-Farm Payroll Report, U.S Personal spending, China’s Trade Balance, Bank of Japan’s Kuroda Speaks, and UoM Consumer Sentiment.
Here is a short overview for bullion for Friday, December 6th:
Gold and Silver – December Review
On Thursday, gold fell by 1.19% to $1,232.5; Silver, by 1.31% to $19.53. During December, gold declined by 1.44%; silver, by 2.35%. In the chart below are the normalized prices of bullion prices for 2013 (normalized to 100 as of November 11th). The prices of gold and silver have resumed their downward trend.
The ratio between the two precious metals slightly increased on Thursday to 63.11. During the month, the ratio increased by 0.93% as silver has moderately under-performed gold.
On Today’s Agenda
U.S. Non-Farm Payroll Report: In the last employment report for October 2013, the labor market improved: The number of non-farm payroll employment rose by 204k – higher than the number many had expected; the U.S unemployment rate edged up to 7.3%; the forthcoming employment report could show additional rise in jobs. If the employment exceed 200 thousand (in additional jobs), this may pressure further down gold and silver and positively affect the U.S dollar and U.S stock markets; the table below shows the reactions in the bullion and forex markets to the changes in the number of jobs added each month.
German Factory Orders: The next report will refer to November 2013. In the last update, the factory orders bounced back and rose by 3.3% during October;
Canada‘s Employment Report: In the recent employment update for October 2013, unemployment remained unchanged at 6.9%; the employment grew by 13.2k during last month;
U.S Personal spending: This monthly report will pertain to the changes in income and outlays in the U.S during October; in the last report regarding September the personal income slightly rose by 0.2%;
China’s Trade Balance: Based on the recent monthly update, China’s trade balance rose to a $31.1 billion surplus; if the surplus further rises, it could indicate China’s economy is improving and thus may positively affect commodities rates;
Bank of Japan’s Kuroda Speaks: Bank of Japan Governor will give a speech in Tokyo;
UoM Consumer Sentiment (preliminary):University of Michigan will release its preliminary consumer sentiment monthly report; this survey could offer information regarding the latest changes in U.S consumers’ sentiment; According to the recent report, the sentiment index sharply fell to 72;
Currencies / Precious Metals Correlations – December Update
On Thursday, the Eur/USD currency pair inched down by 0.04% to 1.3587. During December, the Eur/USD edged down by 0.03%. Conversely, other currencies such as the Aussie dollar slightly appreciated yesterday against the U.S dollar by 0.18%. The correlations among gold, silver and Euro weakened in recent weeks, e.g. the linear correlation between the Euro/USD and gold price is 0.43 during November/December.
Here is a reminder of the main events and publications that are scheduled for today (all times GMT):
08:15 – Switzerland’s CPI
11:00 – German Factory Orders
13:30 – Canada’s Employment Report
13:30 – U.S. Non-Farm Payroll Report
13:30 – U.S Personal spending
Tentative – China’s Trade Balance
Tentative – Bank of Japan’s Kuroda Speaks
14:55 – UoM Consumer Sentiment
For further reading:
- Gold and Silver Outlook for December 2013
- Gold and Silver Weekly Forecast for December 2-6
- Weekly Outlook of Financial Markets for December 2-6
- Gold and Silver Yearly Outlook For 2013
- Is the Golden Era of Gold Over?