Gold and silver prices started the week with very sharp losses; many commodities prices, stock indexes and forex exchange rates also sharply declined yesterday. This reaction was probably prompted by the markets’ disappointment from the recent EU Summit. Moody’s announcement to reconsider all EU countries credit rating may have also helped push down the financial markets. Today, the FOMC meeting will be held, U.S. retail sales report will be published and GB’s CPI will be reported. Currently gold and silver are traded with moderate changes.
Here is a market outlook of precious metals prices for today, December 13th:
Gold and Silver Prices –December Update
Gold price sharply declined on Monday by 2.83% to $1,668.2; silver price also declined by 3.88% to $31.00. The chart below shows the development of gold and silver prices in December (normalized gold and silver prices to November 30th 2011). During December gold price fell by 4.7% and silver price by 5.49%.
The market didn’t react well to the agreement struck among many EU countries; the agreement was reached over the weekend in the recent EU summit.
Moody’s also reacted to this agreement and stated that it will review all the EU’s countries credit rating and may revise it down. This news was probably also among the factors to drive the commodities markets down including precious metals market.
On Today’s Agenda
FOMC Meeting (Statement): The upcoming FOMC meeting might bring some new developments especially if the Fed Chairman Bernanke will eventually add a new program to the recent FOMC $400 twist plan that was announced back in November. The FOMC meeting could affect gold and silver prices;
U.S. Retail Sales: this report will refer to November; in the October report, the retail sales, when controlling for the price changes, moderately increased by 0.5% from the previous month; this report could affect commodities traders (see here my review of the recent report).
Forex Trading / Gold & Silver Prices – December Update
The Euro to U.S Dollar sharply fell yesterday by 1.48% to reach 1.3188. Other forex exchange rates such as the Australian dollar and Canadian dollar also sharply fell against the US dollar. The recent decline in the forex markets probably prompted yesterday’s sharp falls in gold and silver prices. If the Euro and AUD will continue to trade down against the USD they may keep gold and silver prices low.
U.S. Treasuries / Gold & Silver Prices – December Update
The U.S. 10-year Treasury yield declined on Monday by 0.04 percent points to 2.03%; during December the 10 year treasury yield dropped by 0.05 percent point. Furthermore, during December there were positive correlations among the U.S. 10 year notes yields and gold and silver prices (see chart below). If the long term U.S. treasury yields will continue to decline, it may pressure gold and silver prices to decrease as well.
The major precious metals are currently traded with moderate changes in the European markets:
Current gold price per ounce short term future (January 2012 delivery) is traded at $1,664.30 per t oz. a $3.9 or 0.23% decrease as of 09:26*.
Current silver price per ounce short term future (January 2012 delivery) is at $31.275 per t oz – a $0.273 or 0.88% increase as of 09:26*.
Gold and Silver Prices Outlook:
Gold and silver prices started the week with sharp falls; this shows that the calm and moderate changes of last week are replaced with sharp changes. Today’s FOMC meeting and the US retail sales could rally the precious metals prices especially if Bernanke will hint of the possibility of another QE program. I speculate the FOMC won’t come up today with another stimulus plan since the U.S. economy starts to show some signs of improvement and the fiscal problems including the budget cuts have yet to be resolved in Washington. Thus, following the sharp falls from yesterday (and all things being equal with no new development related to the EU debt crisis) I speculate the market may correct for the sharp falls and gold and silver prices to bounce back and moderately incline.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
09:30 – Great Britain CPI
13:30 –U.S. Retail Sales Report
19:15 – FOMC Meeting
Tentative –OPEC Monthly Report
Tentative –IEA monthly oil report
All Day –OPEC Meeting
15:30 – EIA Crude Oil Market Report
For further reading:
Monthly Analysis and Outlook:
- Gold and Silver Prices Monthly Outlook for December 2011
- Natural Gas Prices Monthly Outlook for December 2011
About the Author: Lior Cohen, M.A in Economics, a commodities analyst and blogger at Trading NRG