The prices of gold and silver started off the week on a negative note as both declined on Monday. Will precious metals continue their downward trend during the week? Hurricane Sandy will keep the trading in New York closed. The forex trading, however, will continue and precious metals will trade in Asian markets and OTC. In any case, this Hurricane is likely to curb the volatility of gold and silver prices throughout the week. Currently the price of gold and silver are rising. On today’s agenda: Bank of Japan Monetary Policy Statement, Italian 10 Year Bond Auction ECB President Speaks, Bank of Japan Outlook Report.
Here is a short outlook for precious metals for Tuesday, October 30th:
Precious Metals –October Update
On Monday, Gold declined by 0.19% to $1,708; Silver also fell by 0.91% to $31.75. During the month, gold decreased by 3.68%; silver, by 8.19%.
As seen below, the chart shows the shifts in the normalized prices of precious metals during the past month (normalized to 100 as of September 28th). During recent weeks, both gold and silver continued their downward trajectory.
The ratio between the two precious metals rose on Monday to 53.88. During the month the ratio increased by 4.92% as gold slightly out-performed silver.
On Today’s Agenda
U.S Consumer Confidence: according to the recent monthly report, the consumer confidence index rose in September (M-o-M). The current expectations are that the October index may fall; this report might affect commodities markets;
Tentative – Bank of Japan –Monetary Policy Statement: Bank of Japan will announce its monetary policy for the November. Last month BOJ left the interest rate unchanged at 0 to 0.1 percent, and hasn’t added any additional funds to its stimulus plan. If the BOJ will introduce a new monetary stimulus plan it could affect the Yen, other currencies and commodities prices;
Bank of Japan Outlook Report: Besides the Bank’s rate decision the BOJ will also issue its updated outlook report on the Japanese Economy; this report is issued twice a year and could influence yen traders;
Italian 10 Year Bond Auction: the Italian government will issue another bond auction; in the previous bond auction, which was held at the end of September, the average rate reached 6.19%; if the rate will continue to rise, it could indicate a bearish market sentiment toward Euro based investments;
ECB President Speaks: Mario Draghi will participate in Macro- Research Network of the European System of Central Banks, to be held in Frankfurt. In anticipation for next week’s ECB rate decision, the ECB President might refer to the monetary policy of the ECB and he’s outtake on the future steps of the ECB in relation to Spain’s debt problems;
Currencies / Bullion Market – October Update
The Euro/ USD declined on Monday by 0.28% to 1.2903. During the month, the Euro/USD edged up by 0.3%. Further, some currencies such as Aussie dollar also depreciated during last week against the USD by 0.41%. As seen in the chart below, the correlation between gold and Euro remains mid-strong and positive: during the past several weeks, the linear correlation between gold and EURO/USD reached 0.56 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.32 (daily percent changes). My guess these currencies pairs will continue their downward trend in the days to follow; in any case, if the Euro and other risk currencies will decline against the USD, they are likely to pull down gold and silver.
Current Gold and Silver Rates as of October 30th
Gold (November 2012 delivery) is traded at $1,713.6 per t oz. a $4.9 or 0.29% increase as of 13:24*.
Silver (November 2012 delivery) is at $32.045 per t oz – a $0.3 or 0.95% increase as of 13:24*.
Daily Outlook for October 30th
The prices of precious metals declined on the first day of the week, and may continue this downward trend in the days to follow. U.S consumer confidence report could affect the commodities market: if the consumer confidence index will fall, and my guess it will, it could also adversely affect commodities prices. If Bank of Japan will decide to expand its stimulus package it could affect not only the yen but also precious metals rates. The shutdown of trading floor in New York due to Hurricane Sandy is likely to keep the volatility in forex and bullion markets low in the days to follow. Finally, if the Euro and other “risk currencies” will continue to decline against the USD, and my guess they will, then these currencies are likely to adversely affect precious metals.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
Tentative – Bank of Japan – Rate Decision and Monetary Policy Statement
07:00 – Bank of Japan Outlook Report
Tentative – Italian 10 Year Bond Auction
09:00 – ECB President Speaks
15:00 – U.S Consumer Confidence
08:00 – German Retail Sales
10:00 – Euro Area unemployment rate
13:30 – Canada’s GDP by Industry
15:00 – U.S. Manufacturing PMI
15:30 – U.S Crude Oil Stockpiles Report
02:00 – China Manufacturing PMI
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