Gold and silver prices changed direction and moderately slipped during yesterday’s trading along with other commodities prices such as curd crude oil prices. Currently, gold and silver are traded sharply up. Today, the FOMC statement and rate decision will be announced (update: Fed will keep rates low until 2014), U.S. pending home sales report will be published along with the German business climate report, Great Britain’s GDP growth in the fourth quarter and ECB’s President Draghi will give a speech. Many look forward for today’s FOMC statement that may affect forex and commodities markets if it will have any interesting headlines.
Here is a market outlook of metals prices for today, January 25th:
Gold and Silver Prices –January Update
Gold price declined on Tuesday by 0.82% and reached $1,664.5; silver price also slipped 0.91% and reached $31.98. During January, gold price rallied by 6.2% and silver price by 14.54%.
The graph below presents the development of the normalized prices of gold and silver (gold and silver prices are normalized to December 30th) during the month.
The ratio between gold and silver prices slightly increased on Tuesday, January 23rd and reached 52.01. During January the ratio fell by 7.3% as silver price has slightly outperformed gold price.
St. Deviation
Despite the sharp rally of gold and silver prices during the month so far, their daily percent changes’ standard deviations are falling compared with their standard deviations in previous months; this means that the volatility of the bullion prices are declining.
On Today’s Agenda
FOMC Statement and Rate Decision: The FOMC will convene to decide on the interest rate and present an economic outlook for the U.S. economy; currently there is little evidence that the FOMC will decide to change its rate or implement another QE plan especially after the US employment is on the rise; the FOMC’s decision may affect the forex markets and consequently also gold and silver prices if the FOMC will come up with a big announcement (e.g. another stimulus plan), which currently doesn’t seem to be the case;
German Business Climate Survey: This survey projects the changes (on a monthly basis) in the business climate of Germany. In the last report, the business climate index increased to 107.2 in December; if this upward trend will continue, it could positively influence Euro and consequently gold and silver prices;
Great Britain’s GDP Q4 2011: This news will show the growth rate of the British economy during the fourth quarter of 2011; in the previous quarter the Great Britain GDP grew by only 0.5% (Q-2-Q);
ECB President Speaks: Following the last interest rate decision to keep the ECB rate unchanged at 1%, and the recent announcement of S&P to downgrade several EU countries and EFSF credit rating, the President of the European Central Bank, Mario Draghi will probably refer to these issues and try to calm the financial community; if there will be prime headlines from this speech it might affect Euro traders;
U.S. Pending Home Sales: This report present the changes in pending home sales in the U.S. for December 2011; in the November report the pending home sales index increased by 7.3%. These data are another indicator for the progress of the American real estate market;
Forex / Gold & Silver Market – January
The Euro/U.S Dollarcontinued to trade up and ended yesterday’s trading slightly rising by 0.17% to reach 1.3036; if the Euro and Canadian dollar will continue to rally against the U.S. dollar it could indicate that gold and silver prices will continue to trade up as well. Currently, the Euro/USD is falling.
Current Gold and Silver Prices January 25th
Gold price per ounce (February 2012 delivery) is traded at $1,712.10 per t oz. a $47.6 or 2.86% increase as of 20:37*.
Silver price per ounce (February 2012 delivery) is at $33.365 per t oz – a $1.390 or 4.35% increase as of 20:37*.
(* GMT)
Gold and Silver Prices Forecast
Gold and silver prices traded down yesterday, but their general direction seems to continue be upwards. The upcoming news regarding Europe including German business climate, GB GDP and ECB President’s speech may affect not only the Euro, but also the precious metals market: if these reports and speech will be positive and help trade up the Euro, this, in turn, may also positively affect gold and silver prices. The FOMC’s meeting will end today and I speculate there won’t be big headlines from it, but in case there will be it could affect bullion traders.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Today
09:00 – German Business Climate Survey
09:30 – GB GDP Q4 2011
13:15 – ECB President Speaks
15:00 – U.S. Pending Home Sales
15:30 – EIA Crude Oil Market Report
19:15 – FOMC Meeting (Statement)
Tomorrow
13:30 – U.S. Unemployment Claims
13:30 – U.S Core Durable Goods Report
15:00 – U.S. New Home Sales
15:30 –U.S. Natural Gas Market Report
For further reading:
- Why is Gold More Expensive than Platinum?
- Weekly Outlook for 23-27 January
- Gold and Silver Prices Weekly Outlook for January 23-27
- Gold and Silver Prices Outlook for January 2012
About the Author: Lior Cohen, M.A in Economics, a commodities analyst and blogger at Trading NRG.