Gold and silver prices started the week with sharp rises, after they had declined on Friday. Major commodities prices such as crude oil prices also rallied yesterday. The news of Fitch’s negative outlook on U.S. might influence trades during the day. The Italians plan another debt auction that will start today. This might affect forex and commodities traders especially if the auction won’t go well. Today the U.S consumer confidence report will be published. Currently, gold and silver are traded moderate changes.
Here is a market outlook of precious metals prices for November 29th:
Gold and Silver Prices – November Update
Gold price rose on Monday by 1.54% to $1,714.5; silver price also sharply inclined by 3.70% to $32.24. In the chart below, gold and silver prices present a downward trend in recent weeks (normalized gold and silver prices to November 10th 2011). During November gold price declined by 0.6% and silver price by 6.1%.
The ratio between gold and silver prices slightly rose on Monday, November 28th to 53.18. During November, gold price fell by a lower rate than silver price so that the ratio rose by 5.9%.
Despite the sharp changes in directions during recent weeks the standard deviations of the daily percent changes of gold and silver prices are similar in November to the standard deviations in October.
U.S. Budget Cuts – Fitch Changed U.S. Outlook to Negative
The failure of U.S. Super-committee to make Federal budget cuts, started to affect the markets: Fitch, the rating agency, has changed the outlook of the U.S. to negative. This means that even though Fitch still kept the AAA rating of the U.S, there is a greater than 50% chance that Fitch will downgrade the U.S.’s rating within the next two years. Other rating agencies, such as S&P already downgraded the rating of the U.S. so this recent shouldn’t stir up the markets. And yet the markets might react to this news and trade down during the day. If this will be the case, gold and silver prices might also decline.
On Today’s Agenda
U.S Consumer Confidence: in the previous report, the consumer confidence index slightly fell in October compared to September. The current expectations are that this index may continue to drop in the November report; this report could affect commodities markets;
The European Debt Crisis Update November 29th
The rating agencies continue to stir up the markets this time France gets the headline: Standard & Poor’s, the leading rating agency, might change the outlook on the AAA credit rating of France to a negative outlook within the next ten days. If this news will eventually become true, it could resume the downward fall of the Euro.
France’s 10 year bonds yields slightly inclined to 3.69% – a 0.22 percent points gains during the week.
Today, Italy plans to issue additional debt auctions at a total worth of nearly 9.2 trillion Euros. The ten year bonds are estimated at 2.5 billion euros.
If this auction won’t go well, it might also adversely affect the Euro and bring down the financial markets in Europe. Currentlly, the auction seems to go well as 7.5 billion euros worth of bonds were sold.
Italy’s 10 year bonds yields also rise and reached on Monday 7.26% – a 0.62 percent points rise during the week so far.
In the mean time, Germany and France will try to reach an agreement on budget cuts among European countries in order to stabilize the Euro Area. The depreciation of the Euro currency may also adversely affect gold and silver prices as the US dollar becomes stronger.
Germany’s 10 year bonds yields continue to rise and reached yesterday 2.26% – a 0.3 percent points gains during the week.
S&P500 / Gold & Silver Prices – November
The S&P500 index changed direction and sharply rose on Monday by 2.92% to 1,192.55. The S&P500 index and gold and silver prices were strongly and positively correlated during November so far, so that if the stock market will change direction and fall during the day, it may also indicate that gold and silver prices are likely to decline.
Forex Trading / Gold & Silver Prices – November
The Euro to U.S Dollar exchange rate rose yesterday and reached 1.3320 a 0.61% increase. Other forex currencies also sharply appreciated against the US dollar including the Australian dollar and British Pound. The positive correlations among the daily percent changes of gold price, silver price and forex exchange rates such as AUD/USD, Euro/USD may affect the daily changes of gold and silver prices so that if the US dollar will strengthen during the day, the precious metals prices are likely to decline.
Current Gold and Silver Prices
The precious metals prices are currently traded slightly down in the European markets:
Current gold price per ounce short term future (December 2011 delivery) is traded at $1,712.20 per t oz. a $2.3 or 0.13% decrease as of 09:47*.
Current silver price per ounce short term future (December 2011 delivery) is at $31.780 per t oz – a $0.467 or 1.45% decline as of 09:49*.
Gold and Silver Prices Outlook:
Gold and silver prices started the week with sharp gains, as did other indexes and prices such as the Euro, American stock markets indexes and crude oil prices. These positive gains may have just been a correction to the sharp falls recorded on Black Friday. In any case the news related to the rating agencies might adversely affect the markets and trade down gold and silver. Furthermore, if the US dollar will strengthen against major currencies, and the U.S stock markets will resume its descent, gold and silver prices are likely to follow and moderately decrease.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
15:00 – U.S Consumer Confidence
11:00 – Euro Area Annual Inflation
13:15 – ADP estimate of U.S. non-farm payroll
13:30 – Canada GDP by Industry
15:00 – U.S. Pending Home Sales
15:30 – EIA Crude Oil Market Report
1:30 – Australian Retail Trade
2:00– China Manufacturing PMI
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