Gold and silver prices sharply declined yesterday along with other commodities prices such as crude oil prices; this may have been triggered by the recent FOMC meeting and the disappointment of the markets from no new stimulus plan. But today is a new day and there are many items on the agenda including: the ECB President Speech, the Euro Area Manufacturing PMI report, the Libor Rate decision of Swiss National Bank, the U.S. Producer Price Index, the U.S. Unemployment Claims report, the Philly Fed Manufacturing Index survey, and the U.S. TIC Long Term Purchases report. Currently gold and silver are traded with light changes.
Here is a market outlook of precious metals prices for today, December 15th:
Gold and Silver Prices –December Update
Gold price sharply declined on Wednesday by 4.58% to $1,586.9 – the lowest price level since July 14th; silver price also plummeted by 7.44% to $28.94. The chart below shows the sharp downward trend of gold and silver prices during the month (normalized gold and silver prices to November 30th 2011). During December gold price decreased by 9.3% and silver price by 11.8%. Note that in many cases in the past after a day in which there were sharp falls, there came a correction as gold and silver prices tended to rise the next day.
Euro Area Manufacturing PMI (November): In the previous flash report regarding October 2011, the Euro Zone Manufacturing PMI remained below the 50 point mark and reached 47.2;
ECB President Speaks: Following last week’s interest rate cut by the ECB this week the President of the European Central Bank, Mario Draghi will give a speech about the economic progress and stability of the EU. This speech could affect the markets if he will make a surprise announcement of the level of involvement of ECB in containing the European debt crisis;
U.S. Producer Price Index: In the last report regarding October the PPI for finished goods declined by 0.3%(M2M) but rose by 5.9% in annual terms; this news could have an effect on gold and silver prices;
Philly Fed Manufacturing Index: This monthly survey provides an indicator for the economic progress of the US economy as it measures the manufacturing conditions of the US. In the November survey, the index declined to +3.6 in November. This index, may affect not only the US Dollar but also American stock markets and gold price (see here last report);
U.S. Unemployment Claims: initial claims declined by 23,000 to 381,000 claims for the week ending on December 3rd; the number of insured unemployment fell by 174k to 3.585 million during the week of November 26th;
U.S. TIC Long Term Purchases: The Treasury International Capital report will present the main changes in the purchases and sales of US long term treasuries in October 2011. In the previous report regarding September 2011, the net foreign holdings in U.S Treasuries longer-term notes inclined by $57.6 billion;
Libor Rate of Swiss National Bank: the Swiss National Bank will make its decision on the Libor rate; this decision could affect not only forex traders but also commodities traders if there will be a change in the currently low Libor rate;
Forex Trading / Gold & Silver Prices – December Update
The Euro to U.S Dollar declined again on Wednesday by 0.42% to reach 1.2982. Other forex exchange rates such as the Canadian dollar also depreciated against the US dollar. The ongoing depreciation of these currencies may continue to affect gold and silver prices to decline. If the Euro will continue to depreciate against the U.S dollar, they may also further help gold and silver prices to decrease.
Crude Oil Prices / Gold & Silver Prices – December Update
Crude oil prices also sharply declined yesterday by 5.18% (for WTI) and reached $94.95/bbl – the lowest level since November 4th. Crude oil prices and gold and silver prices are strongly and positively correlated in recent months (as seen in the chart below), so that if the oil prices will rally during the day, it may coincide with the increase of gold and silver prices.
The U.S. 10-year Treasury yield declined again on Wednesday by 0.04 percent points to 1.92% – the lowest level since November 23rd; during December the 10 year treasury yield dropped by 0.12 percent point. Furthermore, during December there were positive correlations among the daily percent changes of U.S. 10 year notes yield and gold and silver prices (0.177 and 0.500, respectively). If the LT U.S. treasury yield will further drop, it may also continue to pressure down gold and silver prices.
The major precious metals are currently traded moderately with mixed trend in the American markets:
Current gold price per ounce short term future (January 2012 delivery) is traded at $1,573.20 per t oz. a $13.7 or 0.86% decrease as of 17:56*.
Current silver price per ounce short term future (January 2012 delivery) is at $29.340 per t oz – a $0.140 or 0.48% increase as of 17:56*.
Gold and Silver Prices Outlook:
Gold and silver prices sharply declined yesterday and if the news from Europe and U.S. (i.e. the upcoming reports and events listed above) will be negative I speculate it could also adversely affect gold and silver to further trade down; on the other hand if the reports will be positive or at least not negative including the Philly Fed, then there is a chance that gold and silver prices will moderately rally from the sharp falls they have endured yesterday.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
08:30 – Libor Rate of Swiss National Bank
09:00 – Euro Area Manufacturing PMI
11:25 – ECB President Speaks
13:30 – U.S. Producer Price Index
13:30 – Department of Labor Report – U.S. Unemployment Claims
14:00 – U.S. TIC Long Term Purchases
15:00 – Philly Fed Manufacturing Index
15:30 – EIA U.S. Natural Gas Report
08:30 – ECB President Speaks
13:30 – Report of U.S CPI
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.