Gold and silver prices started the week with moderate gains along with the sharp gains recorded in other major commodities prices such as crude oil prices. Currently gold and silver prices are traded sharply up. Today, U.S Consumer Confidence report will be published; Canada’s Core Retails Sales report; and Canada’s Overnight Rate will be announced.
Here is a market outlook of precious metals prices for today, October 25th:
Gold and Silver Prices – October Update
Gold price inclined on Monday by0.99% to $1,652.3; silver price also rose by 1.45% to $31.64. 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 1.8% and silver prices by 5.2%.
The ratio between gold and silver prices slightly declined on Monday, October 24th to 52.22. During October, silver price inclined by a slightly larger rate than gold price as the ratio fell by 3.2%.
On Today’s Agenda:
U.S Consumer Confidence: in the previous report, the consumer confidence index remained nearly unchanged in September compared with August’s index. The current expectations are that this index may continue to drop in the October report;
Core Retails Sales Canada: This report presents the changes in the retails sales in Canada during August 2011. It may affect the USD/CAD exchange rate (see here the full report);
Canada Overnight Rate: The Bank of Canada will publish its decision regarding the overnight interest rate, which remained unchanged at 1% as of last month. The BOC may continue its policy of keeping the interest rate unchanged, despite the rise in inflation rate to 3.2% (in annul terms).;
Euro Summit – Round Two Tomorrow
Tomorrow, the second of two EU summit will be held. The first meeting was held on Sunday and didn’t bring much news. There are still gaps between the EU leaders and the position of the IMF and private sectors banks: the former consider there should be at least a 50-60% hair cut on the Greek debt, while the latter offer only a haircut of 40% on the debt. Some consider that the European debt crisis will take at least 5 to 10 years to resolve.
As long as there are huge gaps among the institutions involved the major commodities and the US stock markets are likely to benefit from this debacle.
AngloGold Is Boosting Production
According to Bloomberg, AngloGold is planning to boost its production capacity in order to benefit from the sharp gains in gold price. It’s suggested that the representatives of the company consider that the gains in gold price is due to a fundamental change in the precious metals markets. I think it’s best to take such an analysis with a grain of salt.
That being said, Hedge funds are renewing their bullish bets in raw materials over the expectations that the U.S. economy is showing signs of recovery.
U.S Dollar / Gold & Silver Prices – October
The Euro to U.S Dollar exchange rate slightly inclined on Monday by 0.24% to reach 1.3930; this was the fifth straight business days in which the Euro traded up against the USD; other currencies also were traded up against the USD including Yen, and AUD. If the “risk currencies” (i.e. AUD, Euro and CAD) will rise today, they might help push up gold and silver prices.
S&P500 / Gold & Silver Prices – October
The S&P500 index slightly inclined on Monday by 1.29% to reach 1,254.19; this was the third straight day in which the S&P500 rose; during October the S&P500 index added 10.85% to its value. The correlation between the U.S. stock market and silver price shifted to a strong positive correlation during October.
U.S. Treasuries / Gold Price – October
The U.S. 10-year Treasury yield slightly inclined again on Monday by 0.02 percent points to 2.25%; during October the 10 year treasury yield rose by 0.33 percent point. This shift coincides with the rises in the U.S. stock markets indexes. As a result, the correlation between gold prices and US 10 year treasury yield shifted form negative to positive; this might also serve as another indication that the markets are shifting their attention from U.S treasuries to the U.S stock markets.
Current Gold and Silver Prices
The precious metals prices are currently traded sharply up in the European markets:
Current gold price short term future (November 2011 delivery) is traded at $1,707.0 per t oz. a $54.7 or 3.31% increase as of 19:31*.
Current silver price short term future (November 2011 delivery) is at $33.285 per t oz – a $1.641 or 5.19% incline as of 19:30*.
The current ratio of gold to silver prices is at 51.28.
Gold and Silver Prices Outlook:
Gold and silver prices rose again on Monday; gold and silver prices are currently traded slightly up; the renewed interest in raw materials by Hedge funds may have stimulated the gold and silver traders to go bullish on these metals. Furthermore, the ongoing uncertainty revolving the European debt crisis is also likely to drive traders towards safe haven investments. On the other hand, if the American economy will start to pull out of its slump, it may eventually curb some of the gains in gold price.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13:30 – Core Retails Sales Canada (August 2011)
14:00 – Canada Overnight Rate
15:00 – U.S Consumer Confidence
All day – EU Summit
Tentative – Bank of Japan – Rate Decision
13:30 – U.S Department of Commerce – Report on Core Durable Goods
15:00 – U.S. New Home Sales
15:30 – EIA Report on Crude Oil Stockpiles
For further reading:
- Weekly Outlook for October 24-28
- 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.