Gold and silver prices ended November on a positive note as they have sharply inclined along with the rest of the financial markets. The news from Europe on the Fed’s reduction of interest rates on USD loans to EU banks helped rally the markets. The U.S. pending home sales showed a sharp improvement and may have also helped the push up in the markets. ADP estimated the U.S. non-farm payroll increased by 206k in November. If this will turn out to be true in tomorrow’s U.S. non-farm report it could further rally the markets and also affect gold and silver prices. Today the U.S ISM Manufacturing PMI report will be published, and the U.S. Unemployment Claims report. Currently, gold and silver are traded moderately changes.
Here is a market outlook of precious metals prices for today, December 1st:
Gold and Silver Prices – November Update
Gold price sharply rose on Wednesday by 1.83% to $1,750.3; silver price also rose by 2.667% to $32.80. The chart below demonstrates the development of gold and silver prices in recent days (normalized gold and silver prices to November 22nd 2011). During November gold price slightly inclined by 1.5% while silver price fell by 4.5%.
The ratio between gold and silver prices slightly slipped on Wednesday, November 30th to 53.36. During November, gold price fell by a lower rate than silver price so that the ratio rose by 6.2%.
The European Debt Crisis Update December 1st
Yesterday, the markets reacted to the news that the Federal Reserve along with other five central banks will further help the struggling European commercial banks by reducing the interest rates on the US dollar based loans and extend the loans throughout February 2013. This news eased the pressure on the banks and brought down some of the anxiety in the financial markets.
The Finance ministers of 27 EU countries will meet today in Brussels in an attempt to reach an agreement on how to temporarily guarantee banks’ bond issuance and thus improve funding conditions for lending.
On Today’s Agenda
U.S. Unemployment Claims: initial claims rose by 2,000 to 393,000 claims for the week ending on November 19th; the number of insured unemployment inclined by 68K to 3.691 million during the week of November 12th;
U.S. ISM Manufacturing PMI: This report will present the monthly change in manufacturing sector on a national level for November 2011. During October the index slightly fell to 50.8% a 0.8 percent point increase compared to September’s index; this index might affect commodities markets (see here my review of last report
S&P500 / Gold & Silver Prices – November
The S&P500 index sharply rallied yesterday along with the rest of the American stock markets. On Wednesday the S&P500 index rose by 4.33% to 1,246.96. The S&P500 index and gold and silver prices were strongly and positively correlated during November (as seen in the chart below), so that if the stock market will change direction and decline during the day, it may also indicate that gold and silver prices are likely to follow.
Forex Trading / Gold & Silver Prices – November
The Euro to U.S Dollar exchange rate sharply rose yesterday by 0.97% to 1.3446. Other forex currencies also gained on the US dollar such as the AUD and CAD. The positive correlations between precious metals prices and forex exchange rates may further affect the development of gold and silver prices. If the US dollar will change direction today and strengthen during the day, the gold and silver prices are likely to be affected and trade down.
Current Gold and Silver Prices
The major precious metals are currently traded with moderate changes in the European markets:
Current gold price per ounce short term future (December 2011 delivery) is traded at $1,749.50 per t oz. a $0.80 or 0.05% decrease as of 11:25*.
Current silver price per ounce short term future (December 2011 delivery) is at $33.140 per t oz – a $0.336 or 1.02% decline as of 11:16*.
Gold and Silver Prices Outlook:
Gold and silver prices, much like the American stock markets, shifted direction again yesterday and rallied. This rally was probably stem by the renewed optimism in the markets and positive sentiment among traders as the central banks step up in helping EU banks, the sharp increase in the US pending home sales and the renewed speculations of QE3 to be set by the Federal Reserve. This sentiment could change direction very rapidly and bring down not only the stock markets but also gold and silver prices.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13:30 – Department of Labor Report – U.S. Unemployment Claims
15:00 – U.S. ISM Manufacturing PMI
15:30 – EIA U.S. Natural Gas Report
12:00 – Canada Unemployment Rate and Employment Report
13.30 – U.S. Unemployment Rate Report
For further reading:
About the Author: Lior Cohen, M.A in Economics, a commodities analyst and blogger at Trading NRG.