The prices of gold and silver changed direction and rallied yesterday after they had declined in the past couple of days. Their rally coincided with the recovery of other commodities prices and stock market. The British economy (GDP) expanded by a higher than anticipated rate in the third quarter. This positive news may have eased some concerns regarding the stability of the UK. U.S core durable goods orders rose by 9.9% during last month and jobless claims declined by 23k to reach 369k during the previous week. This news may have also helped rally stocks and commodities prices. Currently, the prices of gold and silver are falling. On today’s agenda: German Consumer Climate, KOF Economic Barometer, First Estimate of U.S GDP 3Q 2012 (update: U.S GDP grew by 2% in Q3 2012 – higher than expected).
Here is a short outlook for precious metals for Friday, October 26th:
Precious Metals –October Update
On Thursday, the price of gold changed direction and rose by 0.67% to $1,713; Silver also increased by 1.45% to $32.08. During October, gold decreased by 3.43%; silver, by 7.23%.
As seen below, the chart presents the changes in the normalized prices of bullion during September-October (normalized to 100 as of September 13th).
The ratio between the two precious metals slightly fell on Thursday to 53.4. During the month, the ratio increased by 4.1% as gold slightly out-performed silver.
On Today’s Agenda
First Estimate of U.S GDP 3Q 2012: In the previous estimate the U.S GDP during the second quarter expanded by 1.7%; in the 1Q 2012 the GDP growth rate reached 1.9% (annual rate). This shows a fall in the growth rate for the US’s GDP. If there will be a sharp shift in the growth rate from Q2 to Q3 this could affect not only the US dollar but also commodities prices.
German Consumer Climate: Gfk group will publish its German consumer climate index. If this report will continue to be positive it might also positively affect on the Euro;
KOF Economic Barometer: According to the recent press release, the report predicted that the Swiss Economy is headed towards an expansion in 2012;
Currencies / Bullion Market – October Update
The Euro/ USD declined again on Thursday by 0.3% to 1.2935. During the month, the Euro/USD rose by 0.6%. Further, some other currencies such as Aussie dollar and Canadian dollar also depreciated against the USD by 0.07% and 0.12%, respectively. The correlation between gold and Euro remains robust: during recent weeks, the linear correlation between the gold and EURO/USD was at 0.54 (daily percent changes); the linear correlation between the gold and Aussie dollar/USD was 0.43 (daily percent changes). If the Euro will rally against the USD, it is likely to pull up gold and silver.
Current Gold and Silver Rates as of October 26th
Gold (November 2012 delivery) is traded at $1,714.6 per t oz. a $1.6 or 0.09% increase as of 00:55*.
Silver (November 2012 delivery) is at $32.19 per t oz – a $0.112 or 0.35% increase as of 00:55*.
Daily Outlook for October 26th
The prices of precious metals changed direction and rose yesterday for the first time in three days. This rally might change direction today especially if the U.S GDP will present a sharp shift in the growth of the U.S economy during the third quarter. I suspect that a moderate growth rate (less than an annual rate of 2%) could pull down stocks and commodities prices, which could also suggest gold and silver will also fall. Finally, if the Euro and other “risk currencies” will rally against the USD, then they are likely to positively affect bullion rates.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
07:00 – German Consumer Climate
08:00 – KOF Economic Barometer
13:30 – First U.S GDP 3Q 2012 Estimate
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