The prices of gold and silver changed direction again yesterday and declined for the first time in the past three days. The U.S manufacturing PMI edged up to 51.7; U.S jobless claims declined by 9k to reach 363k. Currently, the prices of gold and silver are edging up. On today’s agenda: U.S. Non-Farm Payroll Report, French 10 Year Bond Auction, Canada’s Employment Report, and U.S Factory Orders.
Here is a short outlook for precious metals for Friday, November 2nd:
Precious Metals –October/November Update
On Thursday, Gold changed direction again and slipped by 0.21% to $1,715; Silver also decreased by 0.2% to $32.25. During the week, gold increased by 0.21%; silver, by 0.67%.
As seen below, the chart shows the developments in the normalized prices of precious metals during the past couple of weeks since the recent FOMC meeting (normalized to 100 as of October 12th). During the past couple of days, both gold and silver remained nearly unchanged.
The ratio between the two precious metals edged down on Thursday to 53.19. During the week, the ratio decreased by 0.45% as gold slightly out-performed silver.
On Today’s Agenda
U.S. Non-Farm Payroll Report: in the previous update regarding September, the number of non-farm payroll employment rose by 114k; the U.S unemployment rate declined to 7.8%; this report may affect not only the U.S dollar, but also precious metals rates (see here my last review on the U.S employment report).
The table below shows the dates of the publications of the previous non-farm payroll reports, the number of jobs added (without future corrections), the reaction of gold and silver prices and of USD/YEN to the changes in the U.S labor report.
The correlation suggests there is a negative relation between the number of jobs added and the prices of bullion. If the upcoming number of jobs added will exceed the 120k mark, this could have a negative effect on bullion rates.
French 10 Year Bond Auction: the French government will issue a bond auction; in the previous bond auction, which was held at the beginning of September, the average rate reached 2.28%;
Canada’s Employment Report: In the previous employment report for September, unemployment edged up by 0.1 pp to 7.4%; the employment grew by 52k during last month. The upcoming report might affect the Canadian dollar and consequently the prices of commodities;
U.S Factory Orders: This report will refer to the shifts in U.S. factory orders of manufactured durable goods during September; in the previous report factory orders declined by 5.2%; this report will offer some insight to the growth of the U.S economy and could affect the path of the U.S dollar;
Currencies / Bullion Market – October/November Update
The Euro/ USD also declined on Thursday by 0.13% to 1.2943. During the week, the Euro/USD edged up by 0.03%. Conversely, several currencies such as Aussie dollar appreciated yesterday against the USD by 0.24%. The correlation between gold and Euro remains mid-strong and positive: during October/November, the linear correlation between gold and EURO/USD reached 0.56 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.43 (daily percent changes). If the Euro and other risk currencies will slightly rise against the USD, they are likely slightly pull up gold and silver.
Current Gold and Silver Rates as of November 2nd
Gold (December 2012 delivery) is traded at $1,716 per t oz. a $1.3 or 0.08% increase as of 00:23*.
Silver (December 2012 delivery) is at $32.33 per t oz – a $0.08 or 0.24% increase as of 00:23*.
Daily Outlook for November 2nd
The prices of precious metals changed direction again and fell on Thursday after gold and silver rallied in the past couple of days. The recent rise in U.S’s manufacturing PMI is likely to pressure down gold and silver rates via the effect of the report on the USD. The upcoming publication of U.S and Canada’s jobs reports are likely to be the main events of the day. If U.S non-farm payroll report will be positive and beat expectations (well above 150k and at least 120k) the prices of gold and silver could come down. Finally, if the Euro and other “risk currencies” will decrease again against the USD, then these currencies are likely to adversely affect precious metals prices.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
Tentative – French 10 Year Bond Auction
13:30 – Canada’s Employment Report
13:30 – U.S. Non-Farm Payroll Report
15:00 – U.S Factory Orders
For further reading: