Gold & Silver Prices – Daily Outlook January 20

Gold and silver prices changed direction and after they had risen for two consecutive days, they have moderately decreased in yesterday’s trading. Other commodities also traded down including crude oil (WTI). Yesterday the U.S. initial jobless claims sharply fell by 50k. Currently, gold and silver are traded down. Today, the U.S. existing home sales report will be published, and Canada’s core consumer price index.

Here is a market outlook of precious metals prices for today, January 20th:

Gold and Silver Prices –January Update

Gold price slipped on Thursday by 0.33% and reached $1,654.5; silver price also decreased by 0.11% and reached $30.51. During January, gold price increased by 5.6% and silver price by 9.29%.

In the chart below are the normalized gold and silver prices (gold and silver prices are normalized to December 30th).

Gold price forecast & silver price outlook 2012 January 20The ratio between gold and silver prices slightly slipped on Thursday, January 19th and reached 54.23. During January the ratio fell by 3.4% as silver price has slightly outperformed gold price.

Ratio Gold price forecast & silver price outlook 2012 January 20St. Deviation

Despite the sharp gains in gold and silver prices throughout January, their daily percent changes’ standard deviations didn’t increase compared with their standard deviations in recent months and are currently at their lowest level since July.

Standard deviation Gold price forecast & silver price outlook 2012 January 20Philly Fed Index Slightly Rose in January

Yesterday, the Philly Fed Manufacturing Index regarding January was published: the survey suggests the U.S. manufacturing conditions further expanded at a slightly faster pace; the January Philly Fed index rose from +6.8 in December to +7.3 in January. This news may have helped push up the American stock markets in yesterday’s trading.

U.S CPI Remained Flat in December

The U.S inflation for December flat and the US inflation, in annual terms, rose by 3.0%. The consumer price index without food and energy slightly rose by 0.1% during December and 2.2% in the past 12 months.

U.S Housing Starts Fell by 4.1%

According to a recent report, privately owned Housing starts fell in by 4.1%; nevertheless, the annual rate for December 2011 was 24.9% above the December 2010.

As I have sited in the pasts, there is a supposed lagged (by one day) and negative relation between the development in housing starts and gold price; i.e. as Housing starts annual rates falls, gold price tends to increase the following day. If this relation will hold up then we should expect gold price to rally today.

On Today’s Agenda

Canada’s Core CPI: in the recent Canadian CPI report regarding November, the CPI rose by 2.9% during the past 12 month; the core CPI excluding food and energy increased by 2.1%. This news might affect the Canadian dollar currency trading.

U.S. Existing Home Sales: following yesterday’s housing starts report, the upcoming report on existing home sales will also offer an indication to the progress of the real estate market in the in U.S.; in the previous report regarding November the number of homes sold rose(see here the recent review);

Forex Exchange Rate Trading / Gold & Silver Prices – January

The Euro to U.S Dollar rose again for the third straight day, yesterday by 0.82% to reach 1.2863; currently it seems that the debt auctions of France and Spain went well, as they have sold their bonds at a lower yields than anticipated. Therefore, if the Euro and other leading currencies such as Canadian dollar will further appreciate against the U.S. dollar it may help rally gold and silver prices. Currently, the Euro/USD is traded slightly down.

American Stock Markets / Gold & Silver Prices – January

The S&P500 index slightly rose Thursday by 0.49% to 1,314.50 – the highest level since July 26th, 2011. Other leading indexes also increased yesterday 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 rally, this might also indicate gold and silver prices will follow. The chart below shows the development of the linear correlation between precious metals prices and S&P500 index during 2011-2012.

Correlation Gold Prices silver price and S&P500 index January 2012 January 20Current Gold and Silver Prices January 20th

The major precious metals prices are currently traded down in the European markets:

Current gold price per ounce short term future (February 2012 delivery) is traded at $1,648.0 per t oz. a $6.5 or 0.39% decrease as of 09:57*.

Current silver price per ounce short term future (February 2012 delivery) is at $30.385 per t oz – a $0.124 or 0.41% decrease as of 09:57*.

(* GMT)

Gold and Silver Prices Outlook

Gold and silver prices changed direction and slightly fell yesterday, but their general trend in January is still upward. The ongoing rally of the Euro against the U.S. dollar will continue to affect commodities trading and may trade up gold and silver prices during the day. Finally, the upcoming U.S. existing home sales might affect the direction of gold and silver prices as I have presented in the past.  

Here is a reminder of the top events and reports that are planed for today (all times GMT):

Today

13:00 – Canada’s Core CPI

15:00 – U.S. Existing Home Sales

For further reading:

1 comment for “Gold & Silver Prices – Daily Outlook January 20

  1. Central Bank News
    January 21, 2012 at 3:05 am

    The Philly Fed index result, along with a handful of other partial data coming out of the US, is among the reasons why the Fed probably wont rush to do another round of Quantitative easing. QE should only really come as an answer to a material turn for the worse – and preempting such a thing is probably not a good idea, though it would be good for gold and other commodities (but not for inflation!).

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