Gold and silver prices slightly declined on the last day of the week, and thus continued the unclear path for precious metals prices in recent days. The news from Greece of forming a national unity government may ease some of the speculation around the stability of Greece (at least for now). Currently gold and silver prices are traded slightly up. Today, German Industrial Production report will be published, and the Australian Trade Balance report.
Here is a market outlook of precious metals prices for today, November 7th:
Gold and Silver Prices – November Update
Gold price slightly declined on Friday by 0.51% to $1,756.1; silver price also decreased by 1.20% to $34.08. The chart below shows the development of gold and silver prices since October 20th (normalized gold and silver prices (October 20th 2011=100)). During the month gold price increased by 1.8% but silver price fell by 0.8%.
The ratio between gold and silver prices slightly inclined on Friday, November 4th to 51.52. During the month, silver price declined while gold price slightly rose so that the ratio inclined by 2.6%. The chart below shows the developed of this ratio since October.
Papandreou will step down
The recent news from Greece is that the Prime Minister of Greece George Papandreou will step down and will allow a creation of a national unity government; the new government should be able to secure implementing the EU plan for resolving the Greek debt, including making all the budget cuts Greece had pledged in order to receive the financial aid of the EU and IMF. The Greek debt concerns could affect the forex exchange rate trading, and also commodities trading, but since the recent news seems positive, it may not play a role in the trading today.
On Today’s Agenda:
German Industrial Production: this report will show the changes in the Germany industrial production and could indicate the progress of the German Economy and consequently may affect commodities traders;
Australian Trade Balance: In the August report, the seasonally adjusted balance of goods and services sharply rose from a surplus of $1,817 million in July 2011 to $3,100 million in August 2011. There was an increase in export of non-monetary gold by $392 million (30%); if the gold exports will continue to incline in September, it might suggest an increase in demand for non-monetary gold that could explain the changes in gold prices (see here last report);
Forex Exchange Rates / Gold & Silver Prices – November
The Euro to U.S Dollar exchange rate changed direction on Friday and slightly declined by 0.22% to reach 1.3792. The incoming news from Greece may affect the stability of the Euro and consequently may affect the US Dollar and major commodities prices. The intervention of the BOJ in the currency market to weaken the yen is fronted by currency speculators that are trying the keep the yen strong. This showdown might also affect gold and silver prices. If the Euro and other riskier currencies such as AUD and CAD will resume their decline, it could also affect gold and silver prices to decline.
U.S. Treasuries / Gold & Silver Prices – November
The U.S. 10-year Treasury yield changed direction and slightly declined on Friday by 0.03 percent points to 2.06%; during November the 10 year treasury yield dropped by 0.11 percent point. In recent weeks there were positive correlations among the U.S. 10 year notes yields and gold and silver prices. If the yields will continue to decline, this might indicate a risk aversion sentiment in the financial markets that could curb the demand for gold and silver.
S&P500 / Gold & Silver Prices – November
The S&P500 index declined on Friday by 0.51% to reach 1,253.23, but during November the S&P500 index remained virtually unchanged. During recent weeks, the correlations among the S&P500 index and gold and silver prices were positive, which is consistent with the positive relation of gold and silver prices with the 10 year notes’ yields: these findings might suggest a paradigm shift in which precious metals are not associated with safe haven instruments such as U.S. treasuries. If the stock markets may drop, this may also pressure gold and silver prices to decrease.
Current Gold and Silver Prices Per Ounce
The precious metals prices are currently traded slightly up in the Asian markets:
Current gold price per ounce short term future (December 2011 delivery) is traded at $1,771.6 per t oz. a $15.5 or 0.88% increase as of 06:28*.
Current silver price per ounce short term future (December 2011 delivery) is at $34.410 per t oz – a $0.326 or 0.96% incline as of 06:27*.
The current ratio of gold to silver prices per ounce is at 51.48.
Gold and Silver Prices Outlook:
The no clear direction of gold and silver prices in recent days was probably stem from the positive news from the U.S of the increase in employment, which may have pressured gold and silver prices down, while the speculation around the Greek debt crisis may have pressured gold and silver prices to rise. Hedge funds are claimed to curb their bets on major commodities, this may also affect precious metals. It seems that the major exchange rates continue to play a significant role in the changes in gold and silver prices. Therefore, the changes in gold and silver prices are likely to continue coinciding with the changes in the in major forex exchange rates such as USD/YEN, EURO/USD and AUD/USD
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
12:00 – German Industrial Production
2:30 – Australian Trade Balance
10:30 – Great Britain Manufacturing Production
13:15 – Canadian Housing Starts
3:00 – Chinese CPI
For further reading:
- Weekly Outlook for 7-11 November
- Gold & Silver Prices | Weekly Recap 31 Oct – 4 Nov
- Gold & Silver Prices | Weekly Recap 24-28 October