Precious metals shifted from their low volatility and fell yesterday along with other commodities such as oil. This fall may have been stem by speculation around the U.S data: the recent reports show some signs of progress in the U.S economy such as the rise in the core durable goods. Some reports weren’t too positive, e.g. new home sales slightly declined in October. The upcoming reports regarding the U.S GDP might shed some light about the progress of the U.S economy and thus may also affect precious metals. Moreover, the ongoing talks in Congress regarding the budget cuts to avoid the fiscal cliff are also adding the volatility in the commodities markets by raising the speculations in these markets. Currently, gold prices are rising. On today’s agenda: Second U.S GDP 3Q 2012 Estimate, U.S. Jobless Claims, Governor King speaks, Italian 10 Year Bond Auction and U.S. Pending Home Sales.
Here is a short outlook for precious metals for Thursday, November 29th:
Precious Metals –November Update
On Wednesday, the price of gold tumbled down by 1.48% to $1,716.5; Silver price also decreased by 0.87% to $33.68. During the month, gold edged down by 0.15%; silver rose by 4.23%.
As seen below, in the chart are the changes in the normalized prices of precious metals during November (normalized to 100 as of October 31st). On a monthly scale both precious metals only slightly moved.
The ratio between the two precious metals fell on Wednesday to 50.96. During the month the ratio declined by 4.21% as gold under-performed silver.
On Today’s Agenda
Second U.S GDP 3Q 2012 Report: In the preliminary estimate, the U.S GDP during the third quarter expanded by 2%; in the 2Q2012 the GDP growth rate reached only 1.3% (annual rate). This presents a modest rise in the growth rate for the US’s GDP. If there will be a sharp change in the growth rate from first to second estimate, this could affect not only the US dollar but also commodities rates. Moreover, if the GDP growth rate will rise, it could lower the chances of the FOMC intervening again the U.S financial markets;
U.S. Jobless Claims Weekly Report: in the previous report the jobless claims declined by 41k to reach 410k; this upcoming weekly update may affect the U.S dollar and consequently commodities;
U.S. Pending Home Sales: This report pertain to the shifts in pending home sales in the U.S. for October; in the previous report the pending home sales index rose by 0.3% (M-over-M). These data are another indicator for the developments in America’s housing market; based on last week’s results on housing market, the pending sales may rise again;
Governor King speaks: The governor of Bank of England will give a speech about the recent inflation report; he might also offer some insight behind the recent MPC interest rate decision and monetary policy; this speech may affect the British Pound;
Italian 10 Year Bond Auction: the Italian government will issue its monthly bond auction; in the previous bond auction, which was held during the second week of November, the average rate reached 4.81% – the lowest rate in recent months;
Currencies / Bullion Market – November Update
On Wednesday, the Euro/ USD edged up by 0.07% to 1.2953. During the month, the Euro/USD slipped by 0.05%. Moreover, some currencies such as Aussie dollar slightly appreciated yesterday against the USD by 0.31%. This little movement could suggest the changes in the currencies markets had little effect on precious metals. The correlations among gold, Euro and Aussie are still strong and positive: during November, the linear correlation between gold and Euro /USD reached 0.51 (daily percent changes); the linear correlation between the silver and AUD/ USD was 0.51 (daily percent changes). Thus, if the Euro and other risk currencies will change direction and trade down against the USD, they are likely to pull down gold and silver.
Current Gold and Silver Rates as of November 29th
Gold (short term delivery) is traded at $1,718.9 per t oz. a $2.4 or 0.14% increase as of 08:13*.
Silver (short term delivery) is at $33.59 per t oz – a $0.09 or 0.28% decrease as of 08:13*.
Daily Outlook for November 29th
The prices of gold and silver declined again yesterday along with other commodities. There was low volatility and little movement in the foreign exchange markets. This could suggest the recent fall in precious metals was less related to the changes in the foreign exchange markets. The recent positive reports regarding the U.S economy and the budget talks in the U.S may continue affecting the prices of bullion. The upcoming reports regarding U.S GDP for third quarter and pending home sales could affect not only the USD but also precious metals. If the GDP will show a higher growth rate than in the previous estimate (2%) this could pull down the prices of gold and silver. On the other hand, the new home sales report, which came out yesterday, could have a moderate positive effect on bullion during the day. Finally, if the Euro and other “risk currencies” will resume their downward trend against the USD, then they are likely to pull down precious metals.
Here is a reminder of the top events and publications that are scheduled for today and tomorrow (all times GMT):
10:30 –Governor King speaks
Tentative – Italian 10 Year Bond Auction
13:30 – Second U.S GDP 3Q 2012 Estimate
13:30 – U.S. Jobless Claims Weekly Report
15:00 – U.S. Pending Home Sales
08:00 – KOF Economic Barometer
08:00 – German Retail Sales
10:00 – Euro Area unemployment rate
13:30 – Canada’s GDP by Industry
13:30 – U.S Personal Spending
02:00 – China Manufacturing PMI
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