Gold and silver prices started the week with very sharp falls along with the rest of markets including other commodities such as crude oil and exchange rates such as AUD/USD. The U.S. budget reduction talks will likely to continue affecting bullion traders during the week. Currently gold and silver are traded up. Today, the U.S. second estimate of the Q3 GDP report will be published, the minutes of the last FOMC meeting and the Canada’s Core Retails Sales report.
Here is a market outlook of precious metals prices for today, November 22nd:
Gold and Silver Prices – November Update
Gold price sharply fell on Monday by 2.70% to $1,678.9 – the lowest price level since October 24th; silver price also sharply declined by 4.01% to $31.19. In the chart below, gold and silver prices had a rise and fall pattern during the month (normalized gold and silver prices to October 31st 2011). Due to recent sharp falls, gold price declined by 2.7% during the month and silver price by 9.2%.
The ratio between gold and silver prices slightly inclined on Monday, November 21st to 53.82. During November, gold price decreased by a lower rate than silver price so that the ratio rose by 7.2%.
Despite the sharp changes in direction for both gold price and silver price, during November, their standard deviations of their daily percent changes weren’t different from gold and silver prices’ standard deviations during October.
U.S. Budget Cuts – the Debate Continues
The talks over the U.S. budget cuts by the U.S. Super-committee continues to occupy the news and there are growing concerns of the ramifications of the Super-committee not reaching an agreement to cut at least $1.5 trillion from the Federal Budget over the next decade; currently if the Super-committee won’t reach an agreement by Wednesday, November 23rd there will be a “trigger mechanism” that will automatically cut $1.2 trillion from the federal budget over the next decade. Many predict the Super-committee will fail. In the mean time, these talks over the U.S budget cuts may be among the factors to stir up the financial markets and may have affected stocks and commodities traders.
On Today’s Agenda
Minutes of the recent FOMC Meeting: Following the recent FOMC meeting, in which it was decided to keep the interest rates low and the FOMC revised down its economic outlook on the U.S economy, the minutes might bring some insight regarding the next steps of the FOMC and will there be an additional stimulus plan in the near future (see here FOMC meeting);
U.S. GDP third quarter 2011 (second estimate): This will be the second estimate of the third quarter 2011 real GDP of U.S. In the first estimate of the 3Q2011 the GDP growth rate was 2.5%, compared with 1.3% increase at 2Q2011. If this report will present substantial changes from the first estimate, it may affect commodities traders (for the final estimate of 3Q GDP).
Canada’s Core Retails Sales: This report presents the changes in the retails sales in Canada for September 2011. It may affect the USD/CAD exchange rate (see here the full report);
Forex Trading / Gold & Silver Prices – November
The Euro to U.S Dollar exchange rate changed direction on Monday and slightly fell by 0.26% to reach 1.349. Other forex currencies also sharply depreciated against the US dollar including the Australian dollar. During November the correlations among the daily percent changes of gold price, silver price and forex exchange rates were strong (including AUD/USD, USD/CAD); if the Australian dollar and Canadian dollar will continue to depreciate against the USD as they did in recent weeks, they may also pressure gold and silver prices to decline.
Current Gold and Silver Prices Per Ounce
The precious metals prices are currently traded sharply up in the European markets:
Current gold price per ounce short term future (December 2011 delivery) is traded at $1,692.3 per t oz. a $13.7 or 0.82% increase as of 09:16*.
Current silver price per ounce short term future (December 2011 delivery) is at $31.635 per t oz – a $0.448 or 1.44% incline as of 09:15*.
The current ratio of gold to silver prices per ounce is at 53.49.
Gold and Silver Prices Outlook:
Gold and silver prices sharply declined on the first day of the week; some speculate this was stem by the debate over the U.S budget cuts. There are also mixed signals from the position of hedge funds and in Bloomberg it was reported yesterday that Hedge funds cut their bullish bets on commodities, and today Bloomberg reports Funds raise their exposure to commodities including gold. This only shows that the market has yet to determine the direction of gold and silver prices. If major currencies such as Euro, AUD and CAD and American stock markets will rebound from yesterday’s falls, it may also affect in the same direction gold and silver prices.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13:30 – Core Retails Sales Canada (September 2011)
13:30 – (second estimate) US GDP 3Q 2011 Report
19:00 – FOMC Meeting Minutes
09:00 – Euro Area Manufacturing PMI
13:30 – U.S Department of Commerce – Report on Core Durable Goods
15:30 – EIA Report on Crude Oil Stockpiles
For further reading:
Monthly Analysis and Outlook: