Gold and silver prices started off the week falling after they have risen in the previous three days. Today the bullion market will probably be affected mostly from the FOMC meeting (update: FOMC announced no QE3 for now) and whether there will be surprise announcements. Currently gold is traded down. Additional items on today’s agenda include: U.S. Retail Sales and German ZEW economic sentiment.
Here is a short review on gold and silver prices for Tuesday, March 13th:
Gold and Silver– March Update
Gold price slipped on Monday by 0.68% to $1,699.8; silver even more than gold decreased by 2.34% to $33.41. During the month, gold slipped by 0.67% and silver declined by 3.55%.
The chart below presents the changes in gold and silver during March (prices are normalized to February 29th).
The ratio between gold and silver slightly rose on Monday, and reached 50.87. During the month the ratio rose by 2.98% as gold has outperformed silver. In the chart below are the developments of this ratio during March.
FOMC Meeting: (update: FOMC announced no QE3 for now) Once the statement of the recent of FOMC will get out, we will be able to know whether the recent rally of gold and silver prices was stem from speculation around the FOMC’s decision to implement stimulus plan. Assuming the FOMC won’t decide on another stimulus plan, which I suspect will the case especially since the U.S. economy shows some signs of recovery (e.g. the steady rise in employment and the growth of the U.S GDP), then we should see a drop in gold and silver;
German ZEW economic sentiment: The ZEW indicator of economic sentiment for Germany will refer to March. In February the ZEW indicator for Germany rose to 5.4; if this indictor will rise again it may positively affect the Euro and consequently may rally gold and silver prices;
U.S. Retail Sales Report: this report will show the monthly changes in the retail sales and food services for February; in the previous report regarding January, the retail sales, when controlling for the price changes, rose by 0.4% (for my review of the recent retail sales report); this report is another indicator of the progress of the US economy and could affect the strength of the US dollar.
Forex / Gold & Silver Market – March
The Euro/USD slightly rose on Monday by 0.24% to 1.3154. During the month Euro/U.S Dollar decreased by 1.28%; on the other hand, the Australian dollar and CAD depreciated against the U.S. dollar by 0.57% and 0.2%, respectively. These currencies pairs are historically linearly correlated with the daily percent changes of gold and silver prices; therefore the shifts in the Euro and Australian dollar and CAD during the day may indirectly affect gold and silver prices. Currently, the Euro/USD is slightly rising.
Current Gold and Silver Prices March 13th
Gold (April 2012 delivery) is traded at $1,695.4 per t oz. a $4.4 or 0.26% decrease as of 11:34*.
Silver (April 2012 delivery) is at $33.525 per t oz – a $0.112 or 0.34% increase as of 11:33*.
Gold and Silver Daily Outlook
Precious metals prices started off the week declining. The depreciation of major currencies including Aussie dollar and Canadian dollar may have helped drag down bullion prices. But the main even of the week will be today revolving the FOMC meeting. In the previous FOMC meeting the Fed announced it will keep U.S interest rates low until late 2014. This news immediately pulled up precious metals prices. Unless the Fed will surprise with another announcement regarding interest rates or changes in the balance sheet of the Fed without expanding it (operation twist of 2011), I speculate there won’t be a QE3 announcement today. In this case, gold and silver prices may continue yesterday’s decline and further drop today.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
10:00 –German ZEW economic sentiment
13:30 –U.S. Retail Sales Report
18:15 – FOMC Meeting (Statement)
10:00 – Euro Area Annual Inflation
14:00 – Bernanke Speech
Tentative –IEA monthly oil report
15:30 – EIA Crude Oil Stockpiles
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