The prices of gold and silver bounced back on Monday following their tumble on Friday. The U.S Presidential elections will come to a conclusion today. These elections and the day following the conclusion of the elections could lead to a drop in trading volume in major financial markets. Moreover, this could lead to sharp movements in prices of gold and silver. Currently the prices of gold and silver are rising. Besides the elections, on today’s agenda: Reserve Bank of Australia – Cash Rate Statement and Great Britain Manufacturing Production.
Here is a short outlook for precious metals for Tuesday, November 6th:
Precious Metals –November Update
On Monday, Gold rose by 0.48% to $1,683; Silver also rallied by 0.87% to $31.13. During the month, gold decreased by 2.09%; silver, by 3.67%.
As seen below, the chart shows the shifts in the normalized prices of precious metals during the past couple of weeks (normalized to 100 as of October 18th). During the past several weeks, both gold and silver have declined.
The ratio between the two precious metals decreased on Monday to 54.07. During the month, the ratio rose by 1.64% as gold slightly out-performed silver.
On Today’s Agenda
U.S Presidential Elections: This news is likely to crowd out other news items and so the financial markets might be working light on that day;
Reserve Bank of Australia – Cash Rate Statement: the overnight money market rate of Australia’s Reserve Bank declined by 0.25pp to 3.25%, which is the lowest level since the end of 2009. If the RBA will decide to cut the rate again, this news may affect the Australian dollar that is strongly correlated with bullion prices;
Great Britain Manufacturing Production: in the last report regarding July the index declined by 1.1% (M-2-M); this news may affect the British Pound;
Currencies / Bullion Market – November Update
The Euro/ USD slightly decreased on Monday by 0.29% to 1.2795. During the month, the Euro/USD fell by 1.27%. Conversely, several other currencies such as Aussie dollar slightly appreciated during yesterday against the USD by 0.28%. The linear correlation between gold and Euro/USD remains mid-strong and robust: during recent weeks, the linear correlation between gold and Euro /USD reached 0.61 (daily percent changes); the linear correlation between the gold and Aussie dollar/USD was 0.43 (daily percent changes). Thus, if the Euro and other risk currencies will resume their downward trend against the USD, they are likely to curb the rally of gold and silver.
Current Gold and Silver Rates as of November 6th
Gold (December 2012 delivery) is traded at $1,685.3 per t oz. a $2.1 or 0.12% increase as of 23:20*.
Silver (December 2012 delivery) is at $31.16 per t oz – a $0.03 or 0.1% increase as of 23:20*.
Daily Outlook for November 6th
The prices of bullion changed direction from Friday as both precious metals slightly rose on Monday. The upcoming elections could have a short term substantial effect on the prices of gold and silver. The elections could result in a rise in volatility. Back in the first week of November, 2007 during the U.S Presidential elections the prices of both gold and silver hiked. Will history repeat its self? If RBA will lower again its interest rate this could pull down the Aussie dollar which is strongly linked with the prices of gold and silver. Finally, if the Euro and other “risk currencies” will trade down again against the USD, then they are likely to adversely affect precious metals prices.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
U.S Presidential Elections
05:30 – Reserve Bank of Australia – Cash Rate Statement
09:30 – Great Britain Manufacturing Production
09:00 – Swiss National Bank Foreign Currency Reserve
11:00 – Euro Area Retail Sales
11:00– German Industrial Production
15:30 – U.S Crude Oil Stockpiles Report
19:00 – U.S 10 Year Bond Auction
00:30 – Japan Current Account
02:30 – Australia Employment Report
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