Gold and silver prices ended the week with sharp rises after a week long of falls. Some consider that the rally of gold and silver prices is over and others consider there will be sharp gains during this week. All speculators look towards the EU summit as one of the catalysts that will push gold and silver prices. Currently gold and silver prices are traded up. Today, ECB president Trichet will speak in an ECB Press Conference; the Euro Area Manufacturing PMI will be published.
Here is a market outlook of precious metals prices for today, October 24th:
Gold and Silver Prices – October Update
Gold price sharply inclined on Friday by 1.44% to $1,636.1; silver price also sharply rose by 3.01% to $31.19. The chart below shows the changes in gold and silver prices during the month (normalized gold and silver prices (September 30th 2011=100)). During October, gold price rose by 0.9% and silver prices by 3.7%.
The ratio between gold and silver prices sharply declined on Friday, October 21st to 52.45. During October, silver price inclined by a slightly larger rate than gold price as the ratio fell by 2.7%.
On Today’s Agenda:
Euro Area Manufacturing PMI: In the last report regarding August, the Euro Zone Manufacturing PMI reached 48.4. This report will provide an indicator to the economic growth of the Euro zone economy and could influence the Euro/USD exchange rate consequently major commodities prices;
ECB Press Conference Trichet Speaks: Jean Claude Trichet, President of the European Central Bank, will probably refer to the recent EU Summit which was held yesterday (see below). This speech may affect not only the Euros to US dollar exchange rate, but also major commodities prices such as gold price;
Euro Summit – Round One for the Week
The first of two EU summit was held yesterday. This summit was the first of two summits that will be held this week (the next one will be on October 26th) and was the 13th summit in the past 21 months. In a nut shell, there were any big headlines from the recent summit as the European leaders didn’t reach an agreement in restructuring the Greek debt: basically, the current rumors state that the banks offered a haircut of 40% of the Greek debt, while the EU leaders were pushing for at least a 50% haircut on debt. Germany was still warding off France’s attempt to boost the EFSF. As long as there is uncertainty in this front, it’s likely to keep gold and silver prices high.
Hedge Funds Bullish on Raw Materials & US GDP Q3 2011
Despite the ongoing debacle in the EU summit, there are reports that Hedge funds are renewing their bullish bets in raw materials over the expectations that the U.S. economy is coming out of its slowdown.
The U.S. GDP report for the third quarter will be published this week; some expect that this report will show a 2.5% growth – the highest quarterly growth rate for the U.S. in 2011. If these reports are true then it could ease some of the uncertainty and thus curb the demand for safe haven investments such as gold and silver.
U.S Dollar / Gold & Silver Prices – October
The Euro to U.S Dollar exchange rate inclined on Friday by 0.84% to reach 1.3896; other currencies also were traded up against the USD including CAD and AUD. If the “risk currencies” (AUD, Euro and CAD) will rise today, they might help push up gold and silver prices.
S&P500 / Gold Price – October
The S&P500 index sharply inclined on Friday by 1.88% to reach 1,238.25; during October the S&P500 index increased by 9.44%. The correlation between the U.S. stock market and gold price shifted from negative correlation in the past three months to a moderate positive correlation. If this shift will continue and the precious metals prices’ will have a positive correlation with the U.S. stock markets then it could indicate a shift in the market sentiment as traders are regaining some trust in the financial markets.
U.S. Treasuries / Gold Price – October
The U.S. 10-year Treasury yield slightly inclined on Friday by 0.03 percent points to 2.23%; during October the 10 year treasury yield rose by 0.31 percent point. This shift coincides with the gains the U.S. stock markets and the implementation of the Fed’s recent LT securities purchase plan. As a result, the correlation between gold prices and US 10 year treasury yield shifted form negative relation in the past three months to moderate positive relation; this is another indication that the markets are claming down.
Current Gold and Silver Prices
The precious metals prices are currently traded up in the European markets:
Current gold price short term future (November 2011 delivery) is traded at $1,651.9 per t oz. a $15.8 or 0.97 % increase as of 08:21*.
Current silver price short term future (November 2011 delivery) is at $31.565 per t oz – a $0.372 or 1.19% incline as of 08:22*.
The current ratio of gold to silver prices is at 52.31.
Gold and Silver Prices Outlook:
Gold and silver prices sharply rose on Friday; gold and silver prices are currently traded up; as long as there is the ongoing debacle in the EU among the policymakers in dealing with the European debt crisis, there is probably good chance that this crisis will help keeping the gold and silver prices up. On the other hand, if the American GDP will show a sharp rise, it could curb the recent gains in the bullion markets.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
09:00 – Euro Area Manufacturing PMI
23:00 – ECB Press Conference Trichet Speaks
13:30 – Core Retails Sales Canada (August 2011)
14:00 – Canada Overnight Rate
15:00 – U.S Consumer Confidence
For further reading:
- Weekly Outlook for October 24-28
- Gold and Silver Prices Monthly Outlook for October 2011
- Did the Liquidity Trap Cause the Hike in Gold Price?
- Gold & Silver Prices | Weekly Recap 17-21 October
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.