Gold and silver continued to slowly change during recent days. The recent attempts of President Obama to reach an agreement with Congress regarding to avoid the fiscal cliff didn’t seem to impress investors of bullion up to now. Will gold and silver continue to fall? Currently, gold and silver are declining. On today’s agenda: U.S. Jobless Claims Weekly Report, Consumer Confidence and new home sales.
Here is a short outlook for precious metals for Thursday, December 27th:
Precious Metals – December Update
On Wednesday, gold edged up by 0.03% to reach $1,659.9; the price of silver, on the other hand, slipped by 0.55% to reach $29.98. During the month, gold declined by 2.98%; silver, by 9.7%.
As seen below, the chart shows the shifts in the normalized prices of precious metals during d December (normalized to 100 as of November 30th). During recent weeks, the prices of silver and gold have had a moderate downward trend.
The ratio between the two precious metals slightly rose to 55.36. During the month, the ratio rose by 7.44% as gold out-performed silver.
On Today’s Agenda
U.S. Jobless Claims Weekly Report: in the previous weekly update, the jobless claims rose by 17k to reach 361k; this upcoming weekly report may affect the U.S dollar and consequently bullion rates;
U.S Consumer Confidence: according to the recent monthly report, the consumer confidence index increased again in October (M-o-M). The current expectations are that the December index may further rise; this report might affect precious metals;
U.S. New Home Sales: in the previous monthly update, the sales of new homes declined to an annual rate of 368,000 – a 0.3% drop (month over month); if the number of home sales will rally, it may indicate a sign of some recovery in the U.S real estate market, which may also strength the USD;
Currencies / Bullion Market – December Update
The Euro/ USD changed direction and rose on Wednesday by 0.34% to 1.3224. During December, the Euro/USD rose by 1.8%. Furthermore, some currencies such as Aussie dollar also appreciated yesterday against the USD by 0.17%. This trend of these “risk currencies” seems to have only modestly affected precious metals. The correlations among gold, Euro and Aussie have remained low in recent weeks: during the month, the linear correlation between gold and Euro /USD reached 0.04 (daily percent changes); the linear correlation between the gold and USD/CAD was -0.19 (daily percent changes). This weak correlation might suggest the recent developments in gold and silver didn’t coincide with the shifts of the USD. Nonetheless, if the Euro and other risk currencies will continue to rise against the USD, they are likely to have some positively effect on bullion rates.
Current Gold and Silver Rates as of December 27th
Gold (short term delivery) is traded at $1,657.7 per t oz. a $3 or 0.18% decrease as of 23:20*.
Silver (short term delivery) is at $30.03 per t oz – a $0.01or 0.02% decrease as of 23:20*.
Daily Outlook for December 27th
The prices of gold and silver haven’t done much in recent days. The FOMC decisions in recent months to launch QE3, QE3 plus didn’t seem to help rally the price of precious metals. The debates around the fiscal cliff also seem to have for the time being little effect on precious metals of the foreign exchange rates. The low trading volume may result in a sudden spike in the price volatility of gold and silver in the days to follow (e.g. yesterday, oil prices sharply increased). Nevertheless, I still guess gold and silver will slowly decline during the week. The upcoming U.S reports regarding jobless claims, consumer confidence, and new home sales could affect not only the USD but also precious metals prices. If these reports will show the U.S economy is growing, it could adversely affect gold and silver prices. Finally, if the Euro and other “risk currencies” will rise during the day against the USD, they are likely to positively affect precious metals.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
13:30 – U.S. Jobless Claims Weekly Report
15:00 – U.S Consumer Confidence
15:00 – U.S. New Home Sales
Tentative – Italian 10 Year Bond Auction
07:45 – French Consumer Spending
15:00 – U.S. Pending Home Sales
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