Gold and silver continue seek direction as both metals changed direction and declined yesterday. Precious metals’ fall coincided with the decline in other related markets such as crude oil and stocks. Bernanke’s speech referred to the importance of Congress to tackle the “fiscal cliff” but didn’t refer to the role the Fed will take in case Congress won’t act. EU ministers didn’t reach an agreement on Greek bailout and the IMF also impeded the progress of this issue. Japan’s trade balance report revealed a drop in imports and exports; this report suggests the Japanese economy isn’t expanding. Currently, the prices of gold and silver are slightly rising. On today’s agenda: China Manufacturing PMI, Minutes of MPC Meeting, Great Britain Net borrowing, and German 10 Year Bond Auction.
Here is a short outlook for precious metals for Wednesday, November 21st:
Precious Metals –November Update
On Tuesday, the price of gold declined by 0.62% to $1,723.6; Silver price also decreased by 0.78% to $32.93. During the month, gold rose by 0.26%; silver, by 1.9%.
As seen below, the chart shows the developments in the normalized prices of precious metals during the month (normalized to 100 as of October 31st). Despite the sharp changes in the prices of precious metals during recent days, they are still only slightly up from their initial level from the beginning of November.
The ratio between the two precious metals edged up on Tuesday to 52.34. During November, the ratio declined by 1.61% as gold under-performed silver.
On Today’s Agenda
China flash Manufacturing PMI: as of the previous report for October, the Manufacturing PMI increased to 49.1, which means the manufacturing sectors are still contracting; this index indicates the developments in China’s manufacturing sectors growth rate; if the index will increase, this may positively affect commodities;
Minutes of MPC Meeting: in the recent MPC meeting it was announced the rate will continue to be 0.5% and the asset purchase program at £375 billion; the MPC still has concerns regarding GB’s inflation. The minutes of the recent meeting might offer some information behind this decision;
Great Britain Net borrowing: as of August, the net borrowing was £10.7 billion;
German 10 Year Bond Auction: the German government will issue its monthly bond auction; in the recent bond auction, which was held at the end of last month, the average rate increased to 1.56%;
Currencies / Bullion Market – November Update
The Euro/ USD edged up on Tuesday by 0.02% to 1.2817. During the month, the Euro/USD declined by 1.1%. Alternatively, some currencies such as Aussie dollar depreciated during yesterday against the USD by 0.21%. As stated in the past, the correlations among gold, Euro and Aussie are mid-string and robust: during recent weeks, the linear correlation between gold and AUD /USD reached 0.5 (daily percent changes); the linear correlation between the gold and Euro /USD was 0.47 (daily percent changes). Thus, if the Euro and other risk currencies will continue to dwindle against the USD, they are likely to adversely affect gold and silver.
Current Gold and Silver Rates as of November 21st
Gold (December 2012 delivery) is traded at $1,723.9 per t oz. a $0.3 or 0.02% increase as of 06:17*.
Silver (December 2012 delivery) is at $32.98 per t oz – a $0.05 or 0.15% increase as of 06:07*.
Daily Outlook for November 21st
The prices of gold and silver changed direction and declined yesterday along with the rest of the market including stocks, and crude oil. This downward trend may continue today as the EU leaders continue to prolong the negotiations with end in sight. This situation is likely to continue pulling down the Euro and other “risk currencies” and consequently bullion prices. The upcoming report regarding China’s manufacturing PMI could have a positive effect if the PMI will pass the 50 point mark. Finally, if the Euro and other “risk currencies” will decline 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):
09:30 – Minutes of MPC Meeting
09:30 – Great Britain Net borrowing
Tentative – German 10 Year Bond Auction
15:30 – U.S Crude Oil Stockpiles Report
02:45– China flash Manufacturing PMI
08:30 – Flash German, French and Euro Area Manufacturing PMI
All Day – European Economic Summit Meeting
Tentative – Spanish 10 Year Bond Auction
13:30 – U.S. Jobless Claims Weekly Report
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