Gold and silver prices continue their rally and sharply rose in Tuesday’s trading. France’s debt auction seems to proceed well as the borrowing costs fell. Currently, gold and silver are traded down. Today, U.S. PPI will be published, the U.S. TIC Long Term Purchases, and Australia’s unemployment rate will come out.
Here is a market outlook of precious metals prices for today, January 18th:
Gold and Silver Prices –January Update
Gold price bounced back on Tuesday and rose by 1.52% to reach $1,655.6; silver price also rose by 2.08% and reached $30.14. During January, gold price rose by 5.7% and silver price by 8.0%.
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 month.
U.S. Producer Price Index: This report will show the progress in the PPI during December, i.e. the inflation rate from producers’ stand point. In the last report regarding November this index for finished goods slightly rose by 0.3% compared with October’s rate and rose by 5.7% in annual terms; this news may affect gold and silver prices;
U.S. TIC Long Term Purchases: The Treasury International Capital report will present the main changes in the purchases and sales of US long term treasuries in November 2011. In the previous report regarding October 2011, the net foreign purchases of U.S Treasuries longer-term notes rose by $4.8 billion;
Australia Rate of Unemployment: in the previous report regarding November 2011 the rate of unemployment slightly rose to 5.3%; the number of employed fell by 6,300 people; the number of unemployed slightly rose by 9,400 during November compared with October’s figures. If this trend ill continue to could further affect the Australian dollar (see here the recent report);
Forex Exchange Rate Trading / Gold & Silver Prices – January
The Euro to U.S Dollar continues to zigzag and increased on Tuesday by 0.45 to reach 1.2737; the recent downgrade of several EU countries’ credit rating didn’t seem to impress forex traders as the Euro bounced back and appreciated against the U.S. dollar. The current French debt auction seems to go well and may keep the Euro strong. If the Euro and other leading currencies such as Australian dollar will appreciate against the U.S. dollar it may also pressure up gold and silver prices. Currently, the Euro/USD is traded slightly up.
American Stock Markets / Gold & Silver Prices – January
The S&P500 index slightly rose Tuesday by 0.36% to 1,293.67. Other leading indexes also rallied including the Dow and NASADQ. Since the S&P500 index is strongly and positively correlated to gold price and silver price, if the stock market will continue to rise, this might also indicate that gold and silver prices are likely increase. The chart below shows the upward trend of S&P500 index, gold and silver prices during January (normalized to 100= December 30th).
The U.S. 10-year Treasury yield declined again on Tuesday by 0.02 percent points to 1.87% – the lowest rate this month; during January the 10 year treasury yield declined by 0.10 percent point. This downward trend might indicate that the risk appetite in the markets has subsided. Furthermore, as in the chart below, during January there seems to be positive correlations between the daily percent changes of U.S. long term notes yields and precious metals prices (the linear correlations for 10 year note yields and gold price and silver price is 0.626 and 0.653, respectively). Thus, if the LT U.S. treasury yield will continue to decline, it may also indicate that gold price and silver price will tend to fall.
The major precious metals prices are currently traded down in the American markets:
Current gold price per ounce short term future (February 2012 delivery) is traded at $1,645.10 per t oz. a $10.5 or 0.63% decrease as of 14:08*.
Current silver price per ounce short term future (February 2012 delivery) is at $30.020 per t oz – a $0.115 or 0.38% drop as of 14:09*.
Gold and Silver Prices Outlook
Gold and silver prices bounced back from Friday’s fall and sharply rose yesterday. The good progress of the French auction seem to keep Euro traders positive and this is turn may have been among the factors to rally commodities prices including gold and silver prices. The rise in the American stock market also coincided with the rise of precious metals prices. Furthermore, if the Euro and AUD will continue to appreciate against the U.S. dollar, this may also indicate that the recent upward trend of gold price and silver price will progress during the day. Finally, the upcoming U.S. reports to be published today may also play a role in the direction of gold and silver prices as I have analyzed in the past.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13:30 – U.S. Producer Price Index
14:00 – U.S. TIC Long Term Purchases
15:30 – EIA Crude Oil Market Report
Tentative –IEA monthly oil report
2:30 – Australia Rate of Unemployment
9:00 – ECB Monthly Bulletin
13:30 – Department of Labor Report – U.S. Unemployment Claims
13:30 –U.S core Consumer Price Index
13:30 – U.S. Housing Starts
13:30 – U.S. Building Permits
15:00 – Philly Fed Manufacturing Index
15:30 – EIA U.S. Natural Gas Market Report
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