Gold and silver prices continue to slowly incline even if they zigzag along the way. The recent rally in the American and European stock markets as some of the confidence among traders was restored even for a short while may have helped the rally of major commodities including gold, silver and crude oil. Currently gold and silver prices are traded moderately down. Today, the minutes of the last Australia Central Bank monetary policy meeting will be published, and China’ GDP for Q3 2011.
Here is a market outlook of precious metals prices for today, October 17th:
Gold and Silver Prices – October Update
Gold price slightly inclined on Friday by 0.87% to $1,683.0; silver price also increased by 1.60% to $32.17. The chart below shows the development of gold and silver prices in October (normalized gold and silver prices (September 30th 2011=100)). During the month, gold price inclined by 3.7%, and silver prices by 6.9%.
The ratio between gold and silver prices increased on Friday, October 14th to 52.31. During October, silver price inclined by a slightly larger rate than gold price as the ratio decreased by 3.0%.
The recent slow paced upward trend in gold and silver prices brought down the volatility of these commodities from the record high levels they have reached in September. The standard deviation of the daily percent changes of gold and silver prices slipped in October from September.
G-20 Meeting over the Weekend
The G-20 meeting that was held in Paris over the weekend concluded to endorse a plan to avoid a Greek default. The members of the G-20 and central banks scheduled a summit of the European leaders as a deadline for coming up with this plan. The details are still not completely clear and until there will be a signed agreement among the countries, it’s hard to jump into conclusions. Some analysts even speculate that Britain may also contribute to the €2 trillion international rescue fund. In any case this news already caused a reaction in the markets as they sharply inclined on Friday and may continue to do so over the week.
U.S Retail Sales Increased in September – October Report
The U.S. retail sales showed that during September sales grew by 1.1% compared with August’s sales. This news may have helped the financial markets rally over the last day of the week.
U.S. Federal Deficit Inclined by $64 Billion in September
The Federal Budget deficit increased last month by a slower pace than in previous months: the U.S deficit grew in September by $64.5 billion; this is a decrease of $69.6 billion from the $134.154 billion deficit recorded in August 2011, and an increase from the $43.626 billion in September 2010.
On Today’s Agenda:
Minutes of Monetary Policy Meeting Australia’s Bank: The reserve bank of Australia will present the main aspects in regards to the Bank’s basic interest rate decision; this decision might also affect the AUD/USD exchange rate and consequently the prices of major commodities including gold prices (see here last rate decision);
China Third quarter GDP: during the second quarter of 2011, China grew by 9.5% in annual terms; the current expectations are that the Q3 2011 grew in yearly terms by 9.2%; this slowdown is probably due to the recent raises in the interest rate and loans restrictions by the People Bank of China;
U.S Dollar / Gold & Silver Prices – October
The Euro to U.S Dollar exchange rate inclined on Friday by 0.75% to reach 1.3882; other currencies also rallied against the USD including the Canadian dollar and AUD. If the “risk currencies” (AUD and CAD) will keep on rising today, they could also assist the progress of gold and silver prices to incline during the day.
S&P500 / Gold Price – October
The S&P500 index inclined on Friday by 1.74% to reach 1,224.58; during October the S&P500 index increased by 8.23%. The correlation between the U.S. stock market and gold price nearly eliminated after they had a negative correlation in previous months.
U.S. Treasuries / Gold Price – October
The U.S. 10-year Treasury yield rose again on Friday by 0.07 percent points to 2.26% – the highest rate since August; during October the 10 year treasury yield rose by 0.34 percent point. This change coincides with the recent rally in U.S stock markets and gold price.
Current Gold and Silver Prices
The precious metals prices are currently traded slightly down in the American markets:
Current gold price short term future (November 2011 delivery) is traded at $1,668.50 per t oz. a $14.5 or 0.86% decrease as of 19:28*.
Current silver price short term future (November 2011 delivery) is at $31.635 per t oz – a $0.538 or 1.67% decline as of 19:28*.
The current ratio of gold to silver prices is at 52.74.
Gold and Silver Prices Outlook:
Gold and silver prices changed direction but also move in a slow paced upward trend. The speculation over the next steps of G20 policymakers in containing the European debt crisis already affected the financial markets. This rally is likely to hit not only the US stock markets but also major commodities including gold and silver.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
2:30 – Monetary Policy Meeting Australia’s Bank
03:00 –China Third quarter GDP
13:30 – U.S. Producer Price Index
14:00 – U.S. TIC Long Term Purchases
18:15 – Bernanke Speaks
For further reading:
- Weekly Outlook for October 17-21
- Gold and Silver Prices Monthly Outlook for October 2011
- Gold & Silver Prices | Weekly Recap 10-14 October
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.