Gold and silver were traded down again for the second consecutive business day. Other commodities prices, such as oil, and the Euro/USD also declined on the first day of the week. On the other hand, several “risk currencies” such as the Canadian dollar and Aussie dollar traded up against the USD. In Europe, there are mixed messages regarding Spain’s bailout. Until this issue will be resolved, I suspect the uncertainty around the Euro will remain high. According to the IMF the world economy will grow by only 3.3% in 2012 – the slowest growth rate since 2009. The IMF revised down its projection from 3.5%. This news may pull down commodities prices. There are reports that hedge funds continue to raise their bullish bets on commodities. Merkel will visit Athens today; perhaps following this visit some light will be shed on Germany’s position vis-à-vis the Greek debt crisis and possible delay in payments. Currently, the prices of gold and silver are falling. Today, ECB President Speaks and Great Britain Manufacturing Production.
Here is a short outlook for precious metals for Tuesday, October 9th:
Precious Metals –October Update
On Monday, Gold declined by 0.29% to $1,775.7; Silver also decreased by 1.61% to $34.02. During the month, gold edged up by 0.1%; silver declined by 1.62%.
As seen below, the chart presents the changes of normalized prices of precious metals during September-October (normalized to 100 as of September 13th). During the past couple of days, gold and silver were traded down.
The ratio between the two precious metals increased again on Monday to 52.2. During October the ratio increased by 1.75% as silver slightly under-performed gold.
St. Deviation of Gold and Silver
The slow movement of both precious metals prices is represented in the recent fall in these metals prices’ volatility during October: the standard deviations of gold and silver (daily percent changes) reached 0.63% and 1.13%, respectively. These figures are lower than standard deviations recorded in the previous months.
On Today’s Agenda
ECB President Speaks: Mario Draghi will talk in Committee on Economic and Monetary Affairs of the European Parliament, in Brussels. In his speech he might refer to the future monetary steps the ECB. This speech might affect the Euro;
Great Britain Manufacturing Production: this report will present the yearly rate of GB’s manufacturing production for August; in the last report regarding July the index rose by 3.2% (M-2-M); this news may affect the British Pound;
Currencies / Bullion Market – October Update
The Euro/ USD also declined on Monday by 0.55% to 1.2968. During the month, the Euro/USD rose by 0.85%. On the other hand, several currencies including Aussie dollar appreciated last week against the USD by 0.04%. The correlation between gold and Euro remains mid-strong and positive: during September-October, the linear correlation between the gold and EURO/USD reached 0.623 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.69 (daily percent changes). Following yesterday’s mixed trend in the forex markets in which the Euro depreciated while the Aussie dollar and CAD appreciated against the USD, this could contributed to the unclear trend of precious metals prices. Nonetheless, if the Euro and other risk currencies will rally, they are likely to also pull up gold and silver. Currently, the Euro/USD is trading up.
Current Gold and Silver Rates as of October 9th
Gold (November 2012 delivery) is traded at $1,780.5 per t oz. a $4.8 or 0.27% increase as of 05:43*.
Silver (November 2012 delivery) is at $34.2 per t oz – a $0.183 or 0.54% increase as of 05:38*.
Daily Outlook for October 9th
The prices of precious metals started off the week falling along with other forex and commodities prices, but this downward trend might change direction as the week will progress. The uncertainty in Europe mainly vis-à-vis the bailout of Spain and Greece’s debt crisis is likely to affect the Euro and other “risk currencies”. Merkel’s meetings in Greece may shed some light on the German stand regarding Greece’s debt payments. ECB’s Mario Draghi speech could also affect the Euro, if he will refer to ECB’s future steps mainly in regards to Spain and Greece. Finally, if the Euro and other “risk currencies” will bounce back today, then they are likely to pull up bullion rates.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
08:30 – ECB President Speaks
09:30 – Great Britain Manufacturing Production
All Day – European Council Meeting
05:00 – SNB Chairman Jordan Speaks
Tentative – China New Loans
18:00 – U.S 10 Year Bond Auction
00:50 –Minutes of the Japanese monetary policy meeting
02:30 – Australia Employment Report
For further reading: