Gold and silver prices bounced back on Friday after they had recorded falls in the previous two days. There are new developments from Europe that may affect the bullion market and Japan’s GDP grew in the third quarter by 1.5%. Currently gold and silver prices are traded with moderate changes. Today, the statement of the recent Bank of Australia’s Monetary Policy Meeting will become available.
Here is a market outlook of precious metals prices for today, November 14th:
Gold and Silver Prices – November Update
Gold price sharply inclined on Friday by 1.69% to $1,788.1; silver price also inclined by 1.69% to $34.68. The chart below presents the development of gold and silver prices in recent month (normalized gold and silver prices to October 31st 2011). During November, gold price increased by 3.6%, and silver price slightly rose by 1.0%.
The ratio between gold and silver prices remained nearly unchanged on Friday, November 11th to 51.56. During November, gold price rose by a higher rate than silver price so that the ratio inclined by 2.7%.
Despite the differences in the development of gold price and silver price throughout the month, there is still a strong correlation between the daily percent changes of gold price and silver price.
The European Debt Crisis Update November 14th
Following the news that European Central Bank will purchase Italian bonds, which helped stabilize the European related financial markets and decrease Italy’s 10 year bond yields, the recent news from Italy is that Silvio Berlusconi officially resigned from his position as Italy’s Prime Minster over the weekend.
Italy’s president announced on Sunday that Mario Monti, former EU competition commissioner, will become Italy’s new prime minister. This news may help stabilize the European financial climate.
As of Friday, Italian government 10 year bonds yields further declined and reached 6.89% – a weekly increase of 0.87 percent points. From the beginning of the month the Italian government 10 year bonds yields inclined by 1.37 percent points.
The new Greek Prime Minister, Lucas Papademos, was sworn into office on November 11, and is working towards forming a new national unity government; this new government will have to implement the agreements Greece has with European Union countries in order to receive loans and avoid a possible default.
As of Friday, Greek government 10 year bonds yields remain high at 27.64% – a weekly increase of 4.4 percent points. From the beginning of the month the Greek government 10 year bonds yields rose by 4.11 percent points.
The news regarding Italy and Greece may keep influencing forex and commodities traders and consequently affect gold and silver prices.
Japan Grew in the Third Quarter by 1.5%
Japan made a comeback and reported a first positive growth rate in 2011 as the GDP of Japan grew by 1.5% (Q-O-Q) during the third quarter of 2011, according to a preliminary report. This growth rate is equivalent in annual terms to 6% growth. Japan’s economy didn’t grow in the last three consecutive quarters; the earthquake that attacked Japan back in March 11th also had its toll on the Japanese economy. This news also goes to show that the efforts of the Japanese government and BOJ to jump start the economy by monetary expansions came through. This news may also positively affect the demand for yen in the forex market and may consequently positively affect gold and silver prices.
Forex Trading / Gold & Silver Prices – November
The Euro to U.S Dollar exchange rate continued to rally and sharply inclined on Friday by 1.06% to reach 1.375. The rally in Euro coincides with the increase in gold and silver prices. The ongoing developments in Europe will probably continue influencing the forex exchange rate markets and consequently may also affect gold and silver prices.
S&P500 / Gold & Silver Prices – November
The S&P500 index sharply inclined on Friday by 1.95% to reach 1,263.85; during November the S&P500 index slightly rose by 0.84%. During November, the correlations among the S&P500 index and gold and silver prices were strong and positive (as seen in the chart below):
If the stock markets will continue to incline, this may also pressure gold and silver prices to rise. Below is a chart of the development of gold and silver prices during November (all prices are normalized to 100 for October 31st)
Current Gold and Silver Prices Per Ounce
The precious metals prices are currently traded slightly down in the European markets:
Current gold price per ounce short term future (December 2011 delivery) is traded at $1,784.0 per t oz. a $4.1 or 0.23% decrease as of 08:39*.
Current silver price per ounce short term future (December 2011 delivery) is at $34.465 per t oz – a $0.217 or 0.63% decline as of 08:40*.
The current ratio of gold to silver prices per ounce is at 51.76.
Gold and Silver Prices Outlook:
Gold and silver prices bounced back on Friday after they had declined during the previous days. The changes in the European and American stock markets might have been among the factors related to the fluctuations in precious metals markets. As the news will continue to pour in from Europe, if there will be any new development that could stir up the forex and stock markets, this news will probably also affect gold and silver prices in the same direction. That being said, the suggestion that gold traders are becoming more bullish may affect the general trend of gold price, and it will probably start to rise throughout the week. Silver price will probably soon follow the footsteps of gold price and increase as well.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Japan’s Preliminary GDP 3Q2011
Monetary Policy Meeting Australia’s Bank
09:30 – Great Britain CPI
10:00– Euro Area GDP 3Q2011 Report
13:30 – Changes in U.S. Retail Sales
13:30 – U.S. Producer Price Index
Bank of Japan – Rate Decision and Monetary Policy Statement
For further reading:
Monthly Analysis and Outlook:
- Gold and Silver Prices Monthly Outlook for November 2011
- Natural Gas Prices Monthly Outlook for November 2011
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.