Gold and silver ended the week with moderate gains and thus continued their January rally. Will this rally continue today? Currently, gold and silver are rising. In the meantime, speculators continue to raise their bet on precious metals the most in recent months. There are still negotiations between holders of Greek bonds and Greece regarding a debt swap; this news will continue to occupy the news cycle. Today, the Bank of Japan will decide on its interest rate.
Here is a market outlook of metals prices for today, January 23rd:
Gold and Silver Prices –January Update
Gold price rose on Friday by 0.57% and reached $1,664.0; silver price also sharply increased by 3.82% and reached $31.68. During January, gold rallied by 6.2% and silver by 13.5%.
The graph below presents the normalized prices of gold and silver (gold and silver prices are normalized to December 30th).
According to the recent report of the Realtors’ organization, the annual rate of US existing home sales reached 4.61 million home sales in December a 5% gain (M-2-M); the December 2011 annual rate is also 3.6% above the 4.45 million annual home sales in December 2010.
On Today’s Agenda
Bank of Japan – Rate Decision: The Bank of Japan will announce its interest rate decision and monetary policy decisions. BOJ kept the interest rate unchanged at 0. If the Bank of Japan will introduce another stimulus plan, it could affect the direction of gold price;
Forex / Gold & Silver Prices – January
The Euro/U.S Dollar slipped on Friday by 0.29% to reach 1.2931; the announcement of S&P to downgrade the EFSF rescue fund credit rating may have adversely affected the Euro on Friday and may continue to linger during the day. If the Euro and other currencies such as Australian dollar will appreciate against the U.S. dollar it will help keeping the rally of gold and silver. Currently, the Euro/USD is traded up.
U.S. Treasuries / Gold & Silver – January
The U.S. 10-year Treasury yield rose on Friday by 0.04 percent points to 2.05%; during January the 10 year treasury yield rose by 0.16 percent point. This gain in LT securities yields may indicate that the risk appetite in the markets has increased. Thus if the LT U.S. treasury yield will continue to increase, it may indicate that gold and silver price will rise as well. The chart below shows the development of the U.S. 10 yr yield and gold price during January. It shows their positive relation.
The major precious metals prices are currently rising in the European markets:
Current gold price per ounce short term future (February 2012 delivery) is traded at $1,669.10 per t oz. a $5.1 or 0.31% increase as of 07:34*.
Current silver price per ounce short term future (February 2012 delivery) is at $32.175 per t oz – a $0.5 or 1.58% increase as of 07: 34*.
Gold and Silver Prices Forecast
Gold and silver prices kept their upward trend of recent weeks, and may continue to do so during the day. The negotiations around the Greek debt may influence forex traders, which in turn may affect the direction of bullion prices. The bullish sentiment in the market vis-à-vis precious metals will probably also help keep gold price rising.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Bank of Japan – Rate Decision and Monetary Policy Statement
09:00 – Euro Area Manufacturing PMI
13:30 –Retails Sales Canada
20:00 –Bank of England’s Governor King speaks
For further reading:
- Weekly Outlook for 23-27 January
- Gold and Silver Prices Weekly Outlook for January 23-27
- Gold and Silver Prices Outlook for January 2012
About the Author: Lior Cohen, M.A in Economics, a commodities analyst and blogger at Trading NRG.