Gold and Silver Forecast for January 30th

The prices of gold and silver bounced back from their fall on Tuesday and slightly rose on Wednesday. The recent FOMC meeting ended with another tapering of $10 billion, so that the asset purchase program is now $65 billion a month. Will gold and silver change course again and decline? On today’s agenda: China Manufacturing PMI, KOF Economic Barometer, First U.S GDP 4Q 2013, U.S. Jobless Claims, U.S Pending Home Sales, and Australia’s PPI.

Here is a short overview for precious metals for Thursday, January 30th:

Gold and Silver – January Review                             

On Wednesday, gold slightly increased by 0.91% to $1,262.2; Silver, by 0.25% to $19.54. During January, gold increased by 4.98%; silver, by 1.02%. In the chart below are the normalized rates of bullion during January (normalized to 100 as of December 31st). The prices of gold and silver have slightly rose in recent weeks.

Gold and silver Chart 2014  January 30The ratio between the two precious metals rallied on Wednesday to 64.61. During January, the ratio increased by 3.92% as silver has under-performed gold.

Gold  to silver ratio Chart 2014  January 30

The gold and silver futures volumes of trade have increased and reached on Tuesday 258 thousand and 38 thousand, respectively. The volume of trade is likely to remain high for the rest of the week. The chart below shows the shifts in the volume of trade in the past several weeks.

volume Gold & silver prices 2014 January 30

FOMC Tapered by $10 billion QE3

The FOMC meeting ended yesterday after a two day meeting, in which, as many had anticipated, the FOMC continued to slowly taper QE3 by an additional $10 billion to $65 billion a month of long term asset purchase program. The Fed decided to maintain its tapering game plan in small increments. By doing so, the Fed reduces the uncertainty in the financial markets. The latest disappointing non-farm payroll report didn’t hold steer away the Fed from tapering this time. But if the next couple of non-farm payroll continue to show little growth in employment, this might eventually lead to a halt in the FOMC’s future tapering.

The table below shows the bullion markets’ reaction to the news of the FOMC’s decisions in recent years.

FOMC statment and Gold Silver January 30

On Today’s Agenda

China Manufacturing PMI (HSBC’s final estimate): This is HSBC’s last estimate of its December’s PMI index. Last month’s Manufacturing PMI reached 50.5 – i.e. China’s manufacturing sectors is expanding at a slightly slower rate than before. If the updated PMI index falls again, this will suggest China’s manufacturing conditions aren’t improving;

KOF Economic Barometer: This monthly report estimates the developments in the Swiss economy in the upcoming months;

First U.S GDP 4Q 2013 Estimate: This will be the first estimate of U.S’s fourth quarter 2013 real GDP growth. In the previous estimate the U.S GDP rose by 4.1% in the third quarter of 2013 (it was revised up);

U.S. Jobless Claims Weekly update:  In the previous report the jobless claims rose by 1k to reach 326k; this next weekly report may affect the U.S dollar and consequently commodities and stocks markets;

U.S Pending Home Sales: This report shows the developments in pending home sales in the U.S during December; in the previous update for November, pending home sales index inched up by 0.2% (month-over-month). This report is another signal for the progress in the U.S housing market; if the index starts to fall again, it may drag down the U.S dollar;

Australia’s PPI: This quarterly update will refer to fourth quarter of 2013. During the third quarter of 2013, the producer price index rose by 1.9% compared to the second quarter of 2012 and by 1.3% compared to Q2 2013; this index may affect the Aussie dollar;

Currencies / Precious Metals Correlations – January Update

On Wednesday, the Eur/USD currency pair slightly decreased by 0.1% to reach 1.3696. During January, the Eur/USD decreased by 0.58%. Moreover, other currencies such as the Aussie dollar and Canadian dollar also depreciated yesterday against the U.S dollar by 0.49% and 0.62%, respectively. Nonetheless, the correlations among gold, silver and Euro have remained weak in recent weeks, e.g. the correlation between the Euro/USD and gold price is only 0.06 during December/January. The correlation between USD/Yen and gold is -0.53. This could suggest the developments of the gold and silver prices have little to do with the changes in the forex market.

Here is a reminder of the main events and publications that are scheduled for today and tomorrow (all times GMT):


02:45 – China Manufacturing PMI

08:00 – KOF Economic Barometer

13:30 – First U.S GDP 4Q 2013 Estimate

13:30 – U.S. Jobless Claims

15:00 – U.S Pending Home Sales

01:30 – Australia’s PPI


10:00 – German Retail Sales

10:00 – EU CPI Flash Estimate

10:00 – EU Unemployment Rate

13:30 – Canada’s GDP by Industry

02:00 – China Manufacturing PMI

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