The prices of gold and silver changed direction again and bounced back on Thursday along with other commodities prices including crude oil and natural gas. Yesterday, U.S jobless claims update came out: number of jobless claims declined by 8k to reach 363k. This news may have contributed to the strengthening of the USD. The American trade balance deficit declined – exports of goods rose by a larger rate than imports had during September. This news was also a positive signs for the progress of the U.S economy and may have helped pull up commodities prices. Nonetheless, there are still concerns in regards to the “fiscal cliff”. In Europe MPC and ECB kept their respective short term rate unchanged. On today’s agenda: UoM Consumer Sentiment, China Industrial Production, and China’s Trade Balance
Here is a short outlook for precious metals for Friday, November 9th:
Precious Metals –November Update
On Thursday, Gold changed direction and rose by 0.7% to $1,726; Silver also increased by 1.8% to $32.24. During the month, gold increased by 0.4%; silver edged down by 0.24%.
As seen below, the chart shows the changes in the normalized prices of precious metals during recent weeks (normalized to 100 as of October 19th). During November, both gold and silver slightly declined.
The ratio between the two precious metals also changed direction and slipped on Thursday to 53.54. During the month, the ratio rose by 0.64% as gold slightly out-performed silver.
On Today’s Agenda
China Industrial Production: in the previous report about September the index rose to 9.2%; if the index will continue to rise, it could indicate the Chinese economic activity is expanding;
UoM Consumer Sentiment (preliminary): University of Michigan will publish its preliminary consumer sentiment report; this survey could offer another insight to recent developments in U.S consumers’ sentiment regarding the economy; last time the sentiment index rose again to 83.1;
China’s Trade Balance: as of the previous monthly report, China’s trade balance increased to a $27.7 billion surplus; if the surplus will further expand, it could indicate that China’s economic growth is increasing and thus may positively affect prices of precious metals.
Currencies / Bullion Market – November Update
The Euro/ USD declined again on Thursday by 0.17% to 1.2749. During November, the Euro/USD fell by 1.63%. Moreover, some other currencies such as Canadian dollar also depreciated yesterday against the USD by 0.37%. As seen in the chart below, linear correlation between gold and Euro/USD is still mid-strong and robust: during October/November, the linear correlation between gold and Euro /USD reached 0.54 (daily percent changes); the linear correlation between the silver and AUD/USD was 0.48 (daily percent changes). Thus, if the Euro and other risk currencies will continue to fall against the USD, they are likely to curb the rally of gold and silver.Current Gold and Silver Rates as of November 9th
Gold (December 2012 delivery) is traded at $1,735 per t oz. a $9.1 or 0.53% increase as of 00:10*.
Silver (December 2012 delivery) is at $32.44 per t oz – a $0.2 or 0.6% increase as of 00:10*.
Daily Outlook for November 9th
The prices of bullion changed direction again and bounced back on Thursday. The volatility of the precious metals prices seem to have settled after the sharp shifts during the beginning of the week. IN Europe there weren’t any big changes as the ECB and MPC left their respective rate flat. The recent rally of the USD may have curbed the rally of bullion rates. The upcoming U.S financial report to be published today including UoM Consumer Sentiment could affect the direction of the USD, which could determine the path of gold and silver. Finally, the upcoming Chinese reports could also affect commodities prices. If the upcoming reports will show signs of progress, this could also pull up the prices of commodities.
Here is a reminder of the top events and publications that are scheduled for today (all times GMT):
06:30 –China Industrial Production
14:55 – UoM Consumer Sentiment
Tentative –China’s Trade Balance
Tentative –OPEC Monthly Report
For further reading: