Gold and silver prices continue to rise along with the rest of the other commodities prices including crude oil prices. The Australian dollar appreciated against the US dollar. This rally in the Forex market may have also helped push up gold and silver prices. Currently, gold and silver are traded up. There are reports of rising imports of gold from Hong Kong to China; this news may also partially explain the recent rally in gold prices. On the other hand, Fitch’s concerns of the European debt crisis spreading may be among the factors currently pulling down the Euro and consensually curbing gold’s rally. Today, China’s consumer price index will be published and Great Britain’s trade balance report. .
Here is a market outlook of precious metals prices for today, January 11th:
Gold and Silver Prices –January Update
Gold price sharply rose on Tuesday by 1.46% to $1,631.5; silver price also sharply rose by 3.59% to reach $29.82. In the chart below are the normalized gold and silver prices (gold and silver prices are normalized to December 30th). During January, gold price rose by 4.1% and silver price by 6.8%.
The ratio between gold and silver prices declined on Tuesday, January 10th and reached 54.72. During January the ratio decreased by 2.5% as silver price has slightly outperformed gold price.
On Today’s Agenda
Great Britain Trade Balance: In the previous report regarding October 2011, UK’s seasonally adjusted trade balance deficit of goods and services contracted from £4.3 billion in September to £1.6 billion in October; if this trade balance deficit will continue to shrink it could affect GBP;
Chinese CPI: in November, the Chinese inflation rate sharply fell compared with October’s CPI and reached an annual rate of 4.2% (it was 5.5% in October); this rate is coming very close to China’s inflation target of 4% in annual terms. The sharp drop in the inflation rate is probably an indication of the effect of the steps taken by the People Bank of China’s to curb the inflation pressures;
Forex Trading / Gold & Silver Prices – January
The Euro to U.S Dollar slightly rose on Tuesday by 0.10% to reach 1.2778; furthermore, in yesterday’s trading the Australian dollar and Canadian dollar strongly appreciated against the U.S dollar. The chart below shows the development of the linear correlation of gold and silver with AUD/USD daily percent changes. It shows that in the past few months the relation between AUD and bullion prices has tighten; thus if the Australian dollar and Canadian dollar will change direction and depreciate against the U.S. dollar, it may curb the recent rally of gold and silver prices. Currently, the Euro/USD and AUD/USD are traded down.
U.S. Treasuries / Gold & Silver Prices – January
The U.S. 10-year Treasury yield rose on Tuesday by 0.02 percent points to 2%; during January the 10 year treasury yield rose by 0.11 percent point. This upward trend might indicate that the risk appetite in the markets has returned. Furthermore, as seen in the chart below, during January there are strong positive correlations among the daily percent changes of U.S. 10 year notes yield and gold and silver prices (in these relations aren’t significant and should be taken with a grain of salt). If the LT U.S. treasury yield will keep on rising, it may also keep gold and silver prices high.
American Stock Markets / Gold & Silver Prices – January
The S&P500 index rose on again Tuesday by 0.89% to 1,292.08. Other leading indexes also rose yesterday including the Dow and NASADQ. Since the S&P500 index is strongly and positively correlated to gold price, if the stock market will continue to rise, this may also indicate that gold and silver are likely trade up.
Current Gold and Silver Prices January 11th
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 $1,641.50 per t oz. a $10 or 0.61% increase as of 10:46*.
Current silver price per ounce short term future (February 2012 delivery) is at $29.985 per t oz – a $0.17 or 0.57% increase as of 10:47*.
(* GMT)
Gold and Silver Prices Outlook
Gold and silver prices continued their upward trend that commenced a couple of weeks ago and as long as the Austrian dollar and Canadian dollar will appreciate against the US dollar, it is likely that precious metals prices will continue with their upward trend otherwise the depreciation of these currencies will curb the bullion rally. The recent news from China may be among the factors keeping the current rally in gold price alive. Furthermore, the ongoing rally in the American stock market on the one hand and the decline in the demand for U.S. long term securities on the other may also indicate that the bullion traders are renewing their risk appetite which could benefit the precious metals prices.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Today
09:30 – Great Britain Trade Balance
15:30 – EIA Crude Oil Market Report
3:30 – Chinese CPI
Tomorrow
09:30 – Great Britain Manufacturing Production
12:00 – Great Britain Bank Rate & Asset Purchase Plan
13:30 –U.S. Unemployment Claims
13:30 – ECB Press Conference and Euro Rate Decision
13:30 – Changes in U.S. Retail Sales
15:30 – EIA U.S. Natural Gas Market Report
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