Following the publication of the minutes of the recent FOMC meeting the bullion market reacted to it very promptly as both gold and silver prices are currently falling precipitately. The minutes reveled that the chances of the Fed executing an additional stimulus plan are low at least in the upcoming FOMC meeting to be held at the end of April. Furthermore, there are certain conditions in which the Fed may alter its pledge to keep rates low until late 2014, depending on the progress of the U.S economy. The two main factors keeping gold and silver prices rising are the low rates and the chances of another QE program. Therefore the market reaction to the minutes seems to shift the market sentiment again. The U.S continued to show strength as the new orders of manufacturing goods rose by 1.3% during February. There are several news items on today’s agenda including: EU rate decision, German factory orders, and U.S. ISM Non-Manufacturing PMI
Here is a short forecast on gold and silver prices for Wednesday, April 4th:
Gold and Silver– April Update
Gold price slipped by 0.46% to $1,672; silver on the other hand increased by 0.5% to $33.27.
The chart below shows the development of gold and silver prices during the past few weeks (prices are normalized to March 13th). The chart shows how both precious metals prices zigzagged during the past several weeks.
The ratio between gold and silver slipped again to 50.26. During the past few weeks the ratio edged down by 0.37% as silver has moderately outperformed gold. In the chart below are the changes in this ratio between March 13th and April 3rd.
Minutes of the March FOMC meeting – No QE for now
The minutes of the last FOMC meeting was published. It showed that several FOMC members think there is no need for any additional stimulus plan at least until there will be evidence of an economic slowdown. Since the U.S economy has continued to progress in the months following the January FOMC meeting, when the Fed pledged to keep rates low at least until late 2014, it seems less likely that the Fed will add another stimulus plan in the upcoming FOMC meeting in late April.
On Today’s Agenda
ECB Press Conference and Euro Rate Decision: It was announced that the ECB will keep the rate unchanged at 1%. President of the European Central Bank, Mario Draghi talked in the press conference about the perils the EU economy faces including economic slowdown and inflation. This speech may have been among the factors pulling down the Euro. In previous rate decision ECB kept the rate unchanged at 1%; as of February, the Euro Area inflation remained at annual rate of 2.7%, while the EU unemployment increased to 10.7% and the EU GDP in the fourth quarter contracted by 0.3% ;
German Factory orders: this report will show the changes in theGermany factory orders during February; this news could indicate the progress of the German Economy and consequently may affect foreign exchange and commodities traders;
ADP estimate of U.S. non-farm payroll: ADP will estimate the U.S employment development during the month of March 2012 in anticipation for the upcoming no-farm report to be published on Friday;
U.S. ISM Non-Manufacturing PMI: This report will present the developments in the non-manufacturing sector during March 2012. During February 2012 this index moderately increased to 57.3%; this index may affect forex and commodities trading (for the recent report);
Forex / Gold & Silver Market – April
The Euro/USD declined on Tuesday by 0.65% to reach 1.3233; furthermore, several other currecines pairs such as AUD/USD and CAD/USD also declined. If the Euro/USD and AUD/USD pairs will continue to decline today then their tumble may also adversely affect gold and silver prices.
Current Gold and Silver Prices April 4th
Gold (May 2012 delivery) is traded at $1,620.7 per t oz. a $51.3 or 3.07% decrease as of 16:50*.
Silver (May 2012 delivery) is at $31.455 per t oz – a $1.81 or 5.44% decrease as of 16:50*.
Daily Outlook and Analysis
Gold and silver prices changed direction and along with the market sentiment sharply declined. The upcoming U.S non-farm labor report may also have a negative effect on gold and silver prices. If this market sentiment will continue then it is likely that both metals will continue to trade down during the rest of the day.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
12:00 – German Factory orders
12:45 – ECB Rate Decision
U.S.ISM Non-Manufacturing PMI
15:30 – EIA Crude Oil Stockpiles Report
08:00 – Swiss National Bank Forex Reserves
09:30 –Great BritainManufacturing Production
12:00 –Great BritainBank Rate & Asset Purchase Plan
13:30 –U.S.Department of Labor– Jobless Claims Weekly Update
15:30 – EIAU.S.Natural Gas Market Report
For further reading: