The prices of gold and silver rallied during last week after they had declined during the previous week. The high volatility of precious metals returned during most of the week. Will this high volatility and upward trend continue on the last week of November?
The recent EU Summit and the EU group meetings didn’t result in big decisions regarding the EU budget or the Greek bailout. There were, however, reports that there might be a decision on the Greek bailout next week. The recent news of the rise in the manufacturing PMI (flash report) in China may have positively affected the prices of commodities. Several other reports were published during the week and may have had a moderate effect on the forex and commodities markets: the U.S jobless claims sharply declined by 41k to reach 410k; the U.S housing starts rose by 3.6%. Finally, the Euro/USD traded up by 1.8%; the Canadian and Aussie dollar also appreciated against the USD. This upward trend may have contributed to the rise of precious metals prices.
Here is a short outlook for November 26th to 30th; this includes a fundamental analysis of the main publications and events that may affect precious metals including: Euro-group meeting, U.S new home sales, EU monetary developments, China’s manufacturing PMI, U.S core durable goods, U.S GDP for Q3, Canada’s GDP, and U.S. jobless claims.
Gold price traded up during last week by 2.14%; moreover, during said week, the average rate reached $1,733.4 /t. oz which is also 0.63% higher than the previous week’s average. Gold ended the week at $1,751.4 /t. oz.
Silver also rose during the previous week by 5.39%; further, the average rate also rose by 2.51% to reach $33.41/t oz.
The Euro rose against the U.S dollar by 1.8% (on a weekly scale); moreover, other “risk” currencies such as the Australian dollar also appreciated against the U.S dollar by 1.16%. Perhaps the appreciation of these currencies against the USD, may have contributed to the rise of precious metals rates during last week. The correlation between the Euro/USD and precious metals has strengthened during the week and is still mid-strong and positive: during the past month the correlation between Euro/USD and gold reached 0.57 and between AUD/USD and gold the correlation was 0.55. Thus, if the Euro and other “risk” will continue to rise during the week, this may positively affect gold and silver.
In the video below there is a broad overview of the main publications, speeches and events that may affect gold and silver prices between November 26th and November 30th. These include the above-mentioned news items such as: Euro-group meeting, U.S new home sales, EU monetary developments, China’s manufacturing PMI, U.S core durable goods, U.S GDP for Q3, Canada’s GDP, and U.S. jobless claims (just to name a few).
In conclusion, I guess gold and silver will continue their recent upward trend during the last week of November. There might be a fall, however, in the volatility of precious metals. The volatility might rise again during the first week of December that will entail many big news items and events. The upcoming Euro-group Summit could affect the Euro if the EU ministers of finance will reach an agreement regarding the next Greek bailout. The upcoming reports regarding the U.S economy include the new home sales, core durable goods and GDP for Q3, could affect the USD and commodities prices: if these reports will show little growth in the U.S economy, they could adversely affect the USD. The upcoming publication of China’s manufacturing PMI could affect major commodities by the end of the week. If the PMI will continue to rise, it could positively affect commodities prices. The other reports regarding Canada and EU could affect their respective currency, which could, in turn, affect the prices of precious metals. If the Indian Rupee will further depreciate against the USD, it may curb the growth in the demand for gold in India, among the leading consumers of gold. Finally, if the Euro, Aussie dollar, Canadian dollar and other risk currencies will continue to appreciate against the USD, they could also positively affect precious metals.
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