Gold and silver prices continued their upward trend of recent weeks as they have slightly advanced again during yesterday’s trading. This rally might change direction, depending on the upcoming results of the U.S. payroll report, which will be published today; the current expectations are it will show growth in non-farm employment of 170-250 thousand. Currently gold and silver are slightly trading dpwm. Today, Canada’s employment report will also come out, along with the U.S. ISM non-manufacturing PMI and the U.S. factory orders report.
Here is a report of major news and events, and an analysis of metals prices for Friday, February 3rd:
Gold and Silver– February Update
Gold price rose for the third consecutive day, on Thursday by 0.56% to $1,759.3; silver also increased by 1.09% to $34.18. During the week so far, gold added by 1.38% to its value and silver added 1.14%. These figures show precious metals only moderately rose during the week (UTD).
The chart below presents the development of prices of gold and silver during recent weeks (metals are normalized to 100= January 13th).
The ratio between gold and silver slightly declined on Thursday, February 2nd and reached 51.48. During this week the ratio rose by 0.24% as gold has very slightly outperformed silver.
On Today’s Agenda
U.S. Non-farm Employment Change: during December 2011, the number of non-farm payroll employment grew by 200k; this report might affect not only the U.S dollar, but also gold and silver prices (see here my last review on the U.S employment report). The table below shows the correlations between the daily percent changes of metals prices and change in non-farm payroll. The table shows a negative linear correlation (but not significant); this finding might suggest if the employment will expand again in the upcoming report, then gold and silver prices might trade down.
Canada Employment Report: In the previous employment report for December 2011, unemployment slightly increased by 0.1 percent points to 7.5%; the employment rose by 18k. the upcoming report might affect the direction of Canadian dollar against the USD and consequently also affect commodities prices (see here the recent report);
U.S. ISM Non-Manufacturing PMI: This report will refer to January. During December this index increased (see here my review for December);
U.S Factory Orders: This report will show the changes in U.S. factory orders of manufactured durable goods. According to the recent flash report, during December new orders of manufactured durable goods and Non-defense new orders for capital goods rose (for the recent report). This report might affect forex markets and consequently the bullion market.
Forex Market / Gold & Silver Market – February
The Euro/U.S Dollar didn’t do much during yesterday’s trading and only slightly declined by 0.12% to 1.3144; during the week Euro/U.S Dollar slipped by 0.60%; other leading exchange rates such as Canadian dollar and British pound also slipped against the U.S. dollar. The Australian dollar, on the other hand moderately appreciated against the U.S. dollar. The upcoming U.S. non-farm payroll report might affect the direction of the U.S. dollar; if the Euro and AUD will trade up against the U.S Dollar it could indicate that precious metals prices will also continue their rally. Currently, the Euro/USD is slightly falling.
Current Gold and Silver February 3rd
Gold price per ounce (March 2012 delivery) is traded at $1,739.5 per t oz. a $19.8 or 1.13% decrease as of 15:13*.
Silver price per ounce (March 2012 delivery) is at $33.665 per t oz – a $0.51 or 1.49% decrease as of 15:12*.
(* GMT)
Gold and Silver Forecast
Gold and silver prices rose during most of the week, but today there might be a correction if the U.S. labor report will show signs of improvement as it did in recent months. Therefore, I speculate, the upward trend of gold and silver prices will continue, but there might be a correction during today’s trading.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Today
12:00 – Canada Employment Report
13:30 – U.S. Non-farm Payroll Report
15:00 – U.S. ISM Non-Manufacturing PMI
15:00 – U.S Factory Orders
For further reading: