Gold and silver prices ended the week falling but during most of January they have had an upward trend. The recent downgrade of France’s credit rating from AAA to AA+ by the credit rating Standard & Poor’s may have been among the factors in pulling down the Euro along with commodities prices on Friday. This news may adversely affect France’s attempt to auction today €8.7 billion worth of bills. Currently, gold and silver are traded up. Today, ECB President will give a speech and China’s GDP growth rate report will be published.
Here is a market outlook of precious metals prices for today, January 16th:
Gold and Silver Prices –January Update
Gold price declined on Friday by 1.03% to $1,630.8; silver price also declined by 2% to reach $29.52. During January, gold price rose by 4.1% and silver price by 5.8%.
In the chart below are the normalized gold and silver prices (gold and silver prices are normalized to December 30th). The chart shows the moderate upward trend of these precious metals during the past couple of weeks.
The ratio between gold and silver prices slightly rose on Friday, January 13th and reached 55.24. During January the ratio decreased by 1.6% as silver price has slightly outperformed gold price.
On Today’s Agenda
ECB President Speaks: Following the recent interest rate decision, in which it was decided to keep the rate unchanged at 1%, this week the President of the European Central Bank, Mario Draghi will talk about the economic outlook and stability of the European Union and perhaps even address the recent news of the cut in France’s credit rating by S&P;
China Fourth quarter GDP: during the third quarter of 2011, China grew by 9.1% in annual terms; the current expectations are that the Q4 2011 grew in annul terms by 9.3%; if the growth rate will be lower it might affect gold and silver prices;
Forex Exchange Rate Trading / Gold & Silver Prices – January
The Euro to U.S Dollar changed direction again and sharply fell on Friday by 1.05% to reach 1.2680; the recent downgrade of EU countries’ credit rating may have affected the Euro to trade down against the U.S. dollar in Friday’s trading. If this downward trend will continue it might also adversely affect gold and silver prices. Currently, the Euro/USD is traded down.
U.S. Treasuries / Gold & Silver Prices – January
The U.S. 10-year Treasury yield fell on Friday by 0.05 percent points to 1.89% – the lowest rate this month; during January the 10 year treasury yield declined by 0.08 percent point. This downward trend might indicate that the risk appetite in the markets has contracted. Furthermore, as seen in the chart below, during January there seems to be a positive correlation between the daily percent changes of U.S. 10 year notes yield and gold price (the linear correlation during January is 0.728). Thus, if the LT U.S. treasury yield will continue to fall, it may also indicate that gold price will tend to decline.
Current Gold and Silver Prices January 16th
The major precious metals prices are currently traded up in the European markets:
Current gold price per ounce short term future (February 2012 delivery) is traded at $1,643.70 per t oz. a $12.9 or 0.79% increase as of 08:26*.
Current silver price per ounce short term future (February 2012 delivery) is at $29.845 per t oz – a $0.323 or 1.09% increase as of 08:26*.
(* GMT)
Gold and Silver Prices Outlook
Gold and silver prices declined on Friday, but during most of January they have had an upward trend. There a several news items that might resume this upward trend: if China’s GDP will show a strong growth it might also have a positive effect on commodities prices. Following the downgrade of France’s credit rating, the upcoming speech of ECB president Draghi might reassure Euro traders and thus curb its recent downward trend. On the other hand, if the U.S. LT securities yields will continue to drop, it may also indicate that the American stock markets and commodities prices will fall as well.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Today
18:00 – ECB President Speaks
02:00 –China Fourth quarter GDP
OPEC Monthly Report
Tomorrow
09:30 – Great Britain CPI
10:00 –German ZEW economic sentiment
10:00 – Euro Area CPI and Core Monthly Inflation
14:00 – Bank of Canada’s Overnight Rate
For further reading:
- Gold and Silver Prices Outlook for January 2012
- Weekly Outlook for 16-20 January
- Gold and Silver Prices Weekly Outlook for January 16-20
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