Gold and silver prices renewed yesterday their upward trend and sharply inclined as major currencies traded up against the US dollar. Currently gold and silver prices are traded slightly down. Yesterday the minutes of the last FOMC meeting was published and showed the negative analysis of the FOMC of the US economic outlook. Today, there are many reports to be published including U.S. Unemployment Claims report, Canadian Trade Balance and American Trade Balance.
Here is a market outlook of precious metals prices for today, October 13th:
Gold and Silver Prices – October Update
Gold price rose on Wednesday by 1.30% to $1,682.0; silver price also inclined by 2.47% to $32.79. The chart below shows the changes of gold and silver prices during October (normalized gold and silver prices (September 30th 2011=100)). During the current month, gold price inclined by 3.7%, and silver prices by 9.0%.
The ratio between gold and silver prices slightly declined again on Wednesday, October 12th to 51.32. During October, silver price inclined by a slightly larger rate than gold price as the ratio decreased by 4.8%.
On Today’s Agenda:
U.S. Unemployment Claims: Following the recent U.S. labor report, for the week ending on September 30th, initial claims inclined by 6,000 to 401,000 claims; for the week of September 24th, the number of insured unemployment was 3.700 million, a decrease of 52,000 compared with the previous week’s; this report could affect gold and silver traders;
Canadian Trade Balance: In the last report for July 2011, imports edged up and exports inclined during the month: this report could affect CAD currency which is correlated to gold and silver prices;
American Trade Balance: The American trade balance report regarding July showed the goods deficit decreased by $6.4 billion to $60.6 billion; the service surplus increased to $15.8 billion; as a result, the goods and services deficit decreased during to $44.8 billion;
U.S. Federal Budget Balance: this upcoming publication will show the changes in the US federal balance for September 2011; this report indicates the government debt growth and thus may affect the USD. In the previous report, the US government deficit reached in August $134 billion – nearly $4.8 billion increase from the $129 billion deficit recorded in July 2011(See here a summary of the recent report);
FOMC Meeting – Minutes Published
The minutes of the last FOMC meeting, which was held back in September 20-21 was released yesterday. The FOMC decided back then to keep rates unchanged and also issued a plan to lower the long term treasury yields securities by purchasing “until the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less.”
The FOMC’s staff continued to express their concerns regarding the economic progress of the US economy and predicted that the job market will remain high and the GDP will only grow gradually in the short-medium term. The members of the committee didn’t rule out additional stimulus steps in the future. Three members voted against this plan. This shows that Bernanke felt comfortable in approving this “twist plan” without a unanimous vote.
“Most members judged the action as appropriate, given economic conditions and the outlook. Two members said that current conditions and the outlook could justify stronger policy action, but they supported undertaking the maturity extension program at this meeting as it did not rule out additional steps at future meetings. Three members concluded that additional accommodation was not appropriate at this time”.
U.S Dollar / Gold & Silver Prices – October
The Euros to U.S Dollar exchange rate sharply inclined on Wednesday by 1.11% to reach 1.3792; other currencies also followed and sharply gained against the USD including the Canadian dollar and AUD. If these currencies (EUROS, AUD and CAD) will change direction and fall today they could also curb the progress of gold and silver prices throughout the day.
S&P500 / Gold Price – October
The S&P500 index also inclined yesterday by 0.98% to reach 1,207.25; during October the S&P500 index increased by 6.70%. If the stock markets will continue to rally today as they did during most of October (UTD), it may curb the gains in gold and silver prices.
Current Gold and Silver Prices
The precious metals prices are currently traded down in the European markets:
Current gold price short term future (November 2011 delivery) is traded at $1,672.40 per t oz. a $10.2 or 0.61% decrease as of 11:48*.
Current silver price short term future (November 2011 delivery) is at $32.135 per t oz – a $0.654 or 1.99% decline as of 11:48*.
The current ratio of gold to silver prices is at 52.04.
Gold and Silver Prices Outlook:
Gold and silver prices sharply inclined yesterday again over the weak US dollar, but currently the bullion prices are slipping. The upcoming American reports regarding unemployment claims and trade balance may affect forex market consequently the gold and silver markets as well. But the current sentiment in the market continues to keep the uncertainty high and therefore I still speculate that gold and silver prices will keep their slow comeback unless there will be breaking new developments regarding the European debt crisis.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13:30 – Department of Labor Report – U.S. Unemployment Claims
13:30 –Canadian Trade Balance
13:30 –American Trade Balance
15:30 – EIA Report on Crude Oil Stockpiles
15:30 – EIA report on U.S. Natural Gas Market
19:00 –U.S. Federal Budget Balance
3:00 – Chinese CPI
10:00 – Euro Area CPI and Core Monthly Inflation (September)
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