The prices of gold and silver changed direction and increased yesterday. The recent publication of the minutes of the FOMC meeting from back in October didn’t offer much insight regarding the next move of the FOMC. A couple of U.S reports were published yesterday: the U.S PPI edged down by 0.2% mainly due to the fall in energy prices; the U.S retail sales also declined by 0.3% during October. This news may have contributed to the moderate rise of gold and silver prices. Currently, the prices of gold and silver are falling. On today’s agenda: Retails Sales GB, U.S Core Consumer Price Index, Euro Area CPI, U.S. Jobless Claims Weekly Report, Philly Fed Manufacturing Index, and Bernanke’s speech.
Here is a short outlook for precious metals for Thursday, November 15th:
Precious Metals –November Update
On Wednesday, Gold changed rose by 0.31% and settled at $1,730.1; Silver also increased by 1.2% to $32.88. During November, gold increased by 0.64%; silver, by 1.75%.
As seen below, the chart presents the shifts in the normalized prices of bullion during November (normalized to 100 as of October 31st). During the month, both gold and silver have slightly increased.
The ratio between the two precious metals fell on Wednesday to 52.62. During November, the ratio declined by 1.09% as gold under-performed silver.
St. Deviation of Gold and Silver
The high volatility of both bullion rates from the beginning of the month has changed and in recent days these metals have had a low volatility: during the month, the standard deviations of gold and silver (daily percent changes) reached 1.01 % and 1.91%, respectively. These figures are still higher than the standard deviations of these precious metals from previous months.
On Today’s Agenda
Bernanke’s Speech: Bernanke’s speech might offer some insight behind the Fed’s future monetary steps. The Chairman of the Federal Reserve will give a speech at the HOPE Global Financial Dignity Summit, Atlanta, Georgia. The title of the speech is “Housing and Mortgage Markets“;
U.S Core CPI: According to the U.S Bureau of Labor statistics in September, the CPI rose by 0.6% (M-o-M); the core CPI edged up by 0.1%; the core index rose over the last 12 months by 2%;
Philly Fed Manufacturing Index: In the October survey, the growth rate rose to +5.7 in October. If the index will continue to rise it may positively affect not only U.S Dollar but also bullion prices (the previous Philly Fed review);
GB Retails Sales: This report’s results might affect the direction of the British Pound currency. In the recent report regarding September 2012, retails sales rose by 0.6%;
Euro Area CPI: according to the previous report the annual CPI remained at 2.6%, which is slightly higher than ECB’s target inflation; if the inflation will rise again, it could lower the odds of ECB cutting its cash rate in the near future;
U.S. Jobless Claims: in the previous update the jobless claims declined by 8k to 363k; this upcoming weekly update may affect the U.S dollar and consequently the rates of commodities;
Currencies / Bullion Market – November Update
The Euro/ USD rose by 0.25% and reached on Wednesday to 1.2736. During November, the Euro/USD decreased by 1.73%. Conversely, some other currencies such as Aussie dollar depreciated yesterday against the USD by 0.88%. This mixed trend might have contributed to the many shifts in the prices of bullion during yesterday. The correlation among gold silver, Euro and remains mid-strong and robust: during October and November, the linear correlation between gold and Euro /USD reached 0.53 (daily percent changes); the linear correlation between the silver and Euro /USD was 0.45 (daily percent changes). Thus, if the Euro and other risk currencies will change direction and fall today against the USD, they are likely to pull down gold and silver.
Current Gold and Silver Rates as of November 15th
Gold (December 2012 delivery) is traded at $1,725.2 per t oz. a $4.9 or 0.28% decrease as of 06:07*.
Silver (December 2012 delivery) is at $32.66 per t oz – a $0.22 or 0.67% decrease as of 06:07*.
Daily Outlook for November 15th
Precious metals changed direction and slightly increased yesterday. This rally, however, might not last long and could change direction again during the day. In any case, the low volatility in the prices of precious metals is likely to continue in the days to follow. There are some events that could pull up gold and silver: The upcoming speech of Bernanke might pull up the prices of bullion, if he will refer to the future plans of the Fed mainly with respect to the upcoming fiscal cliff the U.S is facing. The upcoming publication of the U.S jobless claims, and Philly Fed manufacturing survey could affect the USD. If these reports will continue to show signs of progress in the U.S economy this could help rally not only the USD, but also commodities prices and major stock indexes. The continuous slow movement in the forex market is likely to also reflect in low volatility in the precious metals market. Therefore, if the Euro and other “risk currencies” will resume their fall against the USD, then they are likely to pull down precious metals.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
09:30 –Retails Sales GB (October 2012)
10:00 – Euro Area CPI
13:30 –U.S Core Consumer Price Index
13:30 – U.S. Jobless Claims Weekly Report
15:00 – Philly Fed Manufacturing Index
18:20 – Bernanke’s Speech
14:00 – U.S. TIC Long Term Purchases
14:15 –U.S. Industrial Production
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