Gold and silver prices continued their rally and inclined yesterday; this rally was probably stem, in part, by the news from ECB to cut interest rates and the speculation that Greek President Papandreou might cancel the referendum. Currently gold and silver prices are traded down. Today, G20 meeting will continue, there will be a voting in the Greek parliament, the U.S. Non-farm Employment report will be published, along with the Canadian Employment Report, and the German Factory orders report.
Here is a market outlook of precious metals prices for today, November 4th:
Gold and Silver Prices – November Update
Gold price sharply rose on Thursday by 2.05% to $1,765.1; silver price also increased by 1.64% to $34.50. The chart below shows the changes in gold and silver prices since October 20th (normalized gold and silver prices (October 20th 2011=100)). During the week (so far), gold price increased by 1.0% but silver price fell by 2.2%.
The ratio between gold and silver prices sharply fell on Thursday, November 3rd to 51.17. During the week, silver price declined by a larger rate than gold price as the ratio rose by 1.9%. The chart below shows the developed of this ratio since September.
ECB Cut Interest Rate to 1.25%
Yesterday, Mario Draghi President of the European Central Bank announced he will slash the ECB interest rate by 0.25 percent points from 1.5% to 1.25%. Draghi also stated he expects the Euro Area annual inflation rate to remain above the 2% target of ECB in the months to come, but he doesn’t expect that the rate reduction will increase inflation pressures. The market soon reacted to the news with the major commodities prices rising.
On Today’s Agenda:
U.S. Non-farm Employment Report – to be Published Today
Today the non-farm employment report will be published; in the recent October report for September, the number of non-farm payroll employment rose by 103k; the U.S unemployment rate remained unchanged at 9.1%; the last report showed some improvement from the previous months, and may have curbed some of the rally of gold and silver prices during the first few days of October (as indicated in the table below). According to ADP the employment grew by 110k in October; if this estimate is valid, it may curb the recent rally in gold and silver prices (see my last review on the U.S labor report).
Will Papandreou Cancel the Referendum?
Will there be a Referendum in Greece on the EU plan of the Greek debt? Following the announcement at the beginning of the week by Prime Minister of Greece Papandreou of a referendum, it’s now reported that Papandreou might back out of the referendum if he will get the support of the opposition in the voting today in the Greek parliament. This report could affect the forex exchange rate trading, and also commodities trading as prices such as gold and silver prices
Additional News Items:
German Factory orders: this report will show the changes in the Germany factory orders and could indicate the progress of the German Economy;
Canada Employment Report: In the last employment report for September 2011, unemployment sharply declined by 0.2 percent points to 7.1%; the employment grew by 61k. If the upcoming report will show an improvement in the labor report in Canada during October, this might affect the Canadian dollar and consequently might also influence the prices of commodities that Canada export to the U.S (see here previous report);
Forex Exchange Rates / Gold & Silver Prices – November
The Euro to U.S Dollar exchange rate continued to rise on Thursday by 0.55% to reach 1.3748. This rally is probably related, in part, to the ECB rate cut and the chance of canceling the Greek referendum. If the Euro and other riskier currencies such as AUD and CAD will resume their descent, it could also affect gold and silver prices to decline.
Current Gold and Silver Prices Per Ounce
The precious metals prices are currently traded with moderate falls in the American markets:
Current gold prices per ounce short term future (December 2011 delivery) is traded at $1,760.8 per t oz. a $4.3 or 0.24% decrease as of 08:55*.
Current silver prices per ounce short term future (December 2011 delivery) is at $34.440 per t oz – a $0.058 or 0.17% decline as of 08:55*.
The current ratio of gold to silver prices per ounce is at 51.12.
Gold and Silver Prices Outlook:
The rally of gold and silver prices in recent days might come to a short halt if the US labor report will be positive; on the other hand, if the Greek parliament and President will eventually cancel the referendum it might push up stock and Forex markets and thus also help push up gold and silver prices. Thus the changes in gold and silver prices are likely to keep on coinciding with the changes in the in major forex exchange rates such as USD/YEN, EURO/USD and AUD/USD.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
All Day –G20 Meeting
12:00 – German Factory orders
12:00 – Canada Unemployment Rate and Employment Report
13.30 – U.S. Unemployment Rate & Non-farm Employment
13.30 – Canada Building Permits
For further reading:
- Weekly Outlook for October 31 – November 4
- Did the Liquidity Trap Cause the Hike in Gold Price?
- Gold & Silver Prices | Weekly Recap 24-28 October