Gold and Silver Prices Outlook for October 2013

The bullion market has cooled down as gold and silver prices fell during most of September. The recent decision of the FOMC to keep QE3 program unchanged wasn’t enough to pull back up precious metals prices. The aftermath of the FOMC non-decision resulted in gold and silver sharply rising the next day only to resume their downward trend the following day. How close of a decision it was? The upcoming minutes of the FOMC meeting could answer this question and perhaps offer some information regarding the timing of tapering QE3. Looking forward, will gold and silver continue to fall in October? Let’s breakdown the upcoming events and publications that may affect the bullion market, which will unfold during October; let’s also provide a short analysis for September.

Gold and Silver Prices September 2013

Gold and silver prices fell during September. Their decline didn’t coincide with the developments of the Euro and Aussie dollar against the USD. By the end of September, the price of gold decreased by 4.94%. The price of silver fell by 7.64%.

Let’s divide September into two parts: the table below divides the month at September 18th; this date breaks the month to before and after the FOMC’s meeting. I divide the month to demonstrate the shift in pace of gold and silver prices; during the first part of September, gold sharply fell by 6.3%; silver, by 8.3%. During the second part of September, however, silver slightly rose by 0.7%; gold price, by 0.7%.

Gold and Silver dollar euro percent change October 2013

During the first part of September, the U.S dollar sharply depreciated against the Euro, Canadian dollar and Aussie dollar; the Euro/USD and AUD/USD currency pairs are usually strongly linked with gold and silver. During the second part of the month, the Aussie dollar, Canadian dollar and Japanese yen slightly depreciated against the USD.

The chart below presents the changes of gold and silver during September, in which the prices are normalized to 100 on August 30th 2013.

Gold and silver forecast October2013

The ratio of gold to silver (gold price/silver price) slightly rose during the month. The ratio increased as silver price has under-performed gold price. During the month the ratio ranged between 58 and 62.

Gold and Silver prices ratio October 2013

Here are several factors that may have adversely affected gold and silver prices during the month:

  1. Several U.S reports showed progress: Manufacturing PMI increased again to 56.2; retail sales edged up by 0.2% during September; new home sales jumped last month; GDP for the second quarter (wasn’t revised) grew by 2.5%; Philly Fed index jumped during September. These reports suggest the U.S economy is growing and thus may have pulled down precious metals;
  2. The speculations around the FOMC decision – the belief was that a QE3 tapering is immanent;
  3. The ongoing drop in U.S jobless claims during most of September;
  4. The depreciation of the Indian Rupee may have pulled down the demand for gold in India, among the leading importers of gold;
  5. The decision of Indian policymakers to raise the taxes on gold imports;
  6. The rally of  U.S equity markets that serve as an alternative investment for precious metals;
  7. The depreciation of the Aussie dollar and Canadian dollar may have curbed the rally of gold and silver prices during the second part of September;

Here are several factors that may have positively affected gold and silver during September:

  1. The decision of the FOMC to keep its policy unchanged and not to taper QE3 for now;
  2. The appreciation of several currencies such as Euro and Aussie dollar against the USD during the first part of September may have curbed the drop in gold and silver prices;
  3. Some U.S reports were not as good as many had anticipated: pending home sales fell last month; consumer confidence declined again;
  4. The decision of BOE, BOC, RBA and ECB to leave their respective cash rate unchanged in September;
  5. The decision of Indian policymakers to lower the taxes on silver imports;
  6. According to the last U.S non-farm payroll report, only 169k jobs were added – this was lower than projected any have positively affected gold and silver prices;
  7. The appreciation of several currencies such as Euro and Aussie dollar at the first part of the month against the USD;
  8. The pledge of the FOMC to keep its low rates until mid 2015;


For further reading see: