Gold and silver prices bounced back on Friday following the sharp falls recorded on Thursday, but now the tables have turned again as the precious metals prices are declining. The agreement reached on Friday in the recent EU Summit doesn’t seem impress the financial community as major forex and commodities are traded down. Today, the Australian Trade Balance report will be published, the German Wholesales Prices, the U.S. Federal Budget Balance report and BOE Governor King will give a speech. Currently gold and silver are traded sharply down.
Here is a market outlook of precious metals prices for today, December 12th:
Gold and Silver Prices –December Update
Gold price slightly inclined on Friday by 0.20% to $1,716.8; silver price also rose by 2.27% to $32.25. The chart below shows the development of gold and silver prices during December (normalized gold and silver prices to November 30th 2011). During December gold price declined by 1.9% and silver price by 1.7%.
The ratio between gold and silver prices slightly slipped on Friday, December 9th to 53.23. During the month the ratio slightly declined by 0.2% as silver price slightly outperformed gold price.
Over the weekend the EU summit was held and the EU countries reached some progress as 23 countries including Germany and France out of the 27 EU countries agreed to strengthen the tighten the fiscal discipline among countries .
The UK didn’t enter this agreement as the British Prime Minster Cameron stated that this agreement doesn’t protect the British interests.
This summit didn’t present a new plan or reached a total consensus and lacked the funding needed for this plan and resolutions on how to break free from the current economic slowdown.
This EU summit doesn’t seem to be accepted in the financial markets as the Euro is traded down and gold and silver prices are also falling.
On Today’s Agenda
Australian Trade Balance: In the previous report, the seasonally adjusted balance of goods and services declined to $2,564 million in September. There was also a decrease in export of non-monetary gold by $411 million (24%); if the gold exports will continue to decline in October, it might suggest a decrease in demand for non-monetary gold that could explain the development in gold price (see here last report);
U.S. Federal Budget Balance: this report indicates the government debt growth and thus may affect the USD. In the November report regarding October the deficit rose by $9 billion to a deficit of $1,295 billion for the fiscal year of 2011 (See here a summary of the recent report).
Forex Trading / Gold & Silver Prices – December Update
The Euro to U.S Dollar slightly rose on Friday by 0.34% to reach 1.3386. Other forex exchange rates such as the Australian dollar and Canadian dollar also appreciated against the US dollar; currently however Euro is traded down. The current decline is probably among the reasons for the currently sharp falls of gold and silver prices. If the Euro and AUD will continue to decline today they may drag down gold and silver prices as well.
Current Gold and Silver Prices December 12th
The major precious metals are currently traded sharply down in the European markets:
Current gold price per ounce short term future (January 2012 delivery) is traded at $1,686.50 per t oz. a $30.3 or 1.76% decrease as of 07:51*.
Current silver price per ounce short term future (January 2012 delivery) is at $31.49 per t oz – a $0.763 or 2.37% decline as of 07:51*.
Gold and Silver Prices Outlook:
Gold and silver prices didn’t do much during last week but this week is a whole new week with many items on the agenda that could stir up the markets and shift the direction of gold and silver prices. The recent EU summit doesn’t seem to be accepted well by the markets as commodities prices including gold and silver prices are declining. Tomorrow’s FOMC meeting might push up again gold and silver prices especially if the Fed will renew another substantial stimulus plan or even hint of its possibility. In the mean time I speculate gold and silver are likely to follow the markets and trade down.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
2:30 – Australian Trade Balance
07:00 – German Wholesales Prices
19:00 –U.S. Federal Budget Balance
Tentative – BOE Governor King Speaks
09:30 – Great Britain CPI
13:30 – Changes in U.S. Retail Sales
19:15 – FOMC Meeting
Tentative –OPEC Monthly Report
Tentative –IEA monthly oil report
For further reading:
About the Author: Lior Cohen, M.A in Economics, a commodities analyst and blogger at Trading NRG.