Gold and silver prices continued the week with moderate changes and no clear trend. All eyes are still towards the upcoming EU summit and tomorrow’s ECB rate decision. Today, Great Britain Manufacturing Production report will be published; Germany’s Industrial Production report; and Australia’s Rate of Unemployment. Currently gold and silver are traded with moderate changes.
Here is a market outlook of precious metals prices for today, December 7th:
Gold and Silver Prices –December Update
Gold price slightly declined on Tuesday by 0.16% to $1,731.8; silver price on the other hand slightly inclined by 1.15% to $32.74. The chart below shows the development of gold and silver prices in recent weeks (normalized gold and silver prices to November 17th 2011). During December gold price slightly declined by 1.1% and silver price by 0.2%.
The ratio between gold and silver prices declined on Tuesday, December 6th at 52.89. During the month the ratio slightly fell by 0.9% as silver price slightly outperformed gold price.
The month started with very moderate correlation between gold and silver prices, but since there are only very few samples, this figure should be taken with a grain of salt and is likely to rise as the month will progress.
The Markets awaits the EU Summit
Following yesterday’s announced made by the leading rating agency Standard and Poor’s to downgrade all the Euro Zone countries’ credit rating including those of Germany and France, the reactions didn’t wait and Germany and France officials stated that they wish to expand the EU rules of borrowing including adding limitations and penalties for deficit violators. This is another issue that will be raised in the upcoming EU summit in Brussels over the upcoming weekend of December 9th.
The concerns are that this downrange could also affect the ability to raise the 1 trillion euros for the EFSF bailout fund which was backed by AAA credit rating countries such as Germany. A failure to raise these funds could further shack the stability of Euro Zone.
In the mean time the IMF approved the delayed tranche of .2 billion euros rescue funds to Greece.
If the EU leaders won’t be able to reach an agreement among them, it could affect these countries’ debt raising ability, adversely affect the EFSF bailout fund and perhaps pressure down the Euro and consequently also pressure gold and silver prices to decline.
On Today’s Agenda
Great Britain Manufacturing Production : this report will show the change in the British manufacturing production in October; in the last report regarding September the seasonally adjusted manufacturing index rose by 0.2% (M-2-M), while the overall production remained unchanged; this news may influence commodities traders;
German Industrial Production: this report will show the changes in the Germany industrial production and could indicate the progress of the German Economy and consequently could affect the sentiment towards the stability of Germany;
Australia’s Unemployment Rate: in the previous October report the unemployment rate slightly fell to 5.2%; the number of employed rose by 10,100 people; the number of unemployed slightly fell by 5,700 during October compared with September’s figures. If this trend ill continue to could further affect the Australian dollar;
Forex Trading / Gold & Silver Prices – December Update
The Euro to U.S Dollar exchange rate slightly inclined again o by 0.01% to 1.3402. Other forex currencies such as the Canadian dollar and Yen also appreciated against the US dollar, while the AUD was traded down against the US dollar and may have affected gold price to decline. The positive correlations between gold and silver prices and forex exchange rates may affect gold and silver prices during the day.
Current Gold and Silver Prices December 7th
The major precious metals are currently traded with mixed trend in the European markets:
Current gold price per ounce short term future (January 2012 delivery) is traded at $1,733.60 per t oz. a $1.8 or 0.10% increase as of 08:48*.
Current silver price per ounce short term future (January 2012 delivery) is at $32.675 per t oz – a $0.069 or 0.21% decline as of 08:48*.
Gold and Silver Prices Outlook:
Gold and silver prices continue to seek direction with moderate changes in recent days. The speculation around the development of the European Union debt crisis doesn’t seem to affect many traders in forex and commodities as they await the ECB rate decision and the EU summit. On the other hand if the upcoming reports on Europe and Australia will be positive it could curb some of the negative sentiment that is lingering in the markets towards the stability of Europe. I speculate that gold and silver prices will continue to trade with moderate changes and slowly climb up as the week will progress.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
10:30 – Great Britain Manufacturing Production
11:00 – German Industrial Production
15:30 – EIA Crude Oil Market Report
2:30 – Australia Rate of Unemployment
13:30 – Department of Labor Report – U.S. Unemployment Claims
13:30 – ECB Press Conference and Euro Rate Decision
15:30 – EIA U.S. Natural Gas Report
3:00 – Chinese CPI
For further reading:
Monthly Analysis and Outlook: