Gold and silver prices changed direction again and slightly slipped on the last day of last week, after the U.S. non-farm employment report showed an increase of 103k in employment during September. Currently, gold and silver prices are traded up. The speculation around the European debt crisis continues to be high with an update of the recent news on this issue herein. Today, the French and Italian industrial production report will be published, and Japan’s current account. Here is a market outlook of precious metals prices for today, October 10th:
Gold and Silver Prices – October Update
Gold price declined on Friday by 1.05% to $1,635.8; silver price sharply fell by 3.16% to $30.99. The chart below shows the development of gold and silver prices during October (normalized gold and silver prices (September 30th 2011=100)). During October gold price inclined by 0.8%, and silver prices by 3.0%.
The ratio between gold and silver prices slightly rose on Friday, October 7th to 52.78. During October, silver price inclined by a larger rate than gold price as the ratio decreased by 2.1%.
From the European Debt Crisis Front – Update and Analysis
Following the tumbling of Dexia, it was reported today that Belgium has agreed to pay 4 billion euros to purchase the local unit of the bank.
Fitch, rating agency, followed the footsteps of S&P and Moody’s and announced it lowered the credit rating of Italy and Spain.
These news items could affect traders by adding uncertainly to the financial markets and consequentially push traders towards safe haven investments including gold and silver. This analysis coincides with the recent report from Bloomberg that short selling is at the highest level since 2006.
U.S Employment Grew by 103k in September
The U.S. employment inclined in September by 103,000 according to the last U.S. labor report, which was published on Friday, October 7th by the Bureau of Labor Statistics. The rate of unemployment remained unchanged at 9.1%.
Historically, as the U.S employments rise gold price tend to decrease; this correlation was mostly due to the effect this news had on the US dollar; the recent news seem to have worked again in the same direction as indicated in the updated table below:
It shows the correlation between the news of the U.S. labor report and the daily changes in gold and silver prices up to the last report of October 7th, 2011 (the complete analysis can be found in the gold and silver prices daily outlook for October 7th).
US Dollar / Gold & Silver Prices – October
The EURO/US Dollar exchange rate slightly slipped on Friday by 0.44% to reach 1.3378; the Canadian dollar also followed and depreciated against the US Dollar by 0.24%. If major risky currencies (AUD and CAD) will change direction and start to appreciate against the US Dollar, they may help gold and silver prices to incline.
S&P500 / Gold Price – October
The S&P500 index changed direction and slightly declined on Friday by 0.82%, but during October the S&P500 index increased by 2.12%. If the stock market will continue to rally today as they did during the month so far, it may curb the gains in gold and silver prices.
U.S. Treasuries / Gold Price – October
The US 10-year Treasury yield sharply increased again on Friday by 0.09 percent points to 2.10%; during October the 10 year treasury yield rose by 0.18 percent point. This shift coincides with the new optimism in the markets of the progress in the U.S. economy. If the U.S. long term securities’ yields will continue rising as they did last week, it might suggest gold price may eventually decrease.
Current Gold and Silver Prices
The precious metals prices are currently traded up in the European markets:
Current gold price short term future (November 2011 delivery) is traded at $1,659.70 per t oz. a $23.9 or 1.46% increase as of 09:04*.
Current silver price short term future (November 2011 delivery) is at $31.990 per t oz – a $0.997 or 3.22% incline as of 09:04*.
The current ratio of gold to silver prices is at 51.88.
Gold and Silver Prices Outlook:
Gold and silver prices changed direction on Friday and fell following the U.S. labor report, but currently they are traded slightly up. The bullion continues to demonstrate lack of direction with the speculation around the European debt crisis news brings each day mixed signals. The recent news from U.S. about the labor report might keep the misdirection of the precious metals’ prices in the short run, but as long as the uncertainty in the markets remains high, gold and silver will likely to make a comeback and their prices will continue their moderate rally during October.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
07:45 – French Industrial Production Report
09:00 – Italy’s Industrial Production Report
24:50 – Japan’s current account
01:30 – Australia’s business confidences survey
08:30 – ECB conference Trichet
13:15 – Canadian Housing Starts
Tentative –OPEC monthly report
For further reading:
- Weekly Outlook for October 10-14
- Gold and Silver Prices Monthly Outlook for October 2011
- Gold & Silver Prices | Weekly Recap 3-7 October
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.