Gold and silver prices ended the trading yesterday slipping again along with other major commodities and the stock markets; some consider the recent liquidity problems in Europe may have helped pull down the commodities market including gold. Currently gold and silver prices are traded down. Today, U.S. Jobless claims report will be published; the U.S. existing home sales, and the Philly Fed Manufacturing Index.
Here is a market outlook of precious metals prices for today, October 20th:
Gold and Silver Prices – October Update
Gold price slightly declined on Wednesday by 1.42% to $1,652.8; silver price also fell by 0.03% to $31.83. The chart below presents the changes in gold and silver prices during the month (normalized gold and silver prices (September 30th 2011=100)). During October, gold price inclined by 1.5%, and silver prices by 4.0%.
The ratio between gold and silver prices slightly inclined on Wednesday, October 19th to 52.66. During October, silver price inclined by a slightly larger rate than gold price as the ratio slipped by 2.4%.
Gold and silver prices continue to move in the same direction as their linear correlation remains high and positive.
On Today’s Agenda:
U.S. Jobless Claims: initial claims slipped by 1,000 to 404,000 claims for the week ending on October 8th; the number of insured unemployment reached 3.724 million, a decrease of 21,500 during the week of October 1st; this report could affect commodities traders;
Philly Fed Manufacturing Index: This survey provides an indicator for the economic progress of the US economy as it measures the manufacturing conditions of the US. In September, the index inclined from -30.7 in August to -17.5 in September. This index may affect not only the USD but also gold and silver prices (see here last report);
Update on European Debt Crisis
Some speculate that the recent slump in commodities including gold and silver is driven by liquidity problem many European banks are facing as they trade their holdings in precious metals to boost their capital buffer. If this analysis has merit it may partially explain the recent drop in commodities prices and could also have additional ramifications in the short term.
On the other hand, the recent review in Bloomberg suggests that silver is likely to make a comeback on high demand for this precious metal in China.
U.S CPI Slightly Inclined in September
The U.S inflation for September 2011 rose by 0.3% or in annual terms by 3.9%. The CPI without food and energy also rose by only 0.1% during September and 2% in the past twelve months. This news may have slightly affected the trading of forex and commodities markets. The bigger news came from the housing market:
U.S Housing Starts Sharply Rose in September
On the other hand the seasonally adjusted annual rate of building permits for privately owned housing reached in September 594,000 – a 5.0% decrease. The news of the housing starts may have curbed some of the falls on Wall Street, but the panic regarding the European debt crisis continues to affect more than other news the shifts in the financial markets.
U.S Dollar / Gold & Silver Prices – October
The U.S Dollar to CAD exchange rate slightly inclined on Wednesday by 0.63% to reach 1.0205; other currencies also were traded with a mixed trend ad the USD rose against AUD but slipped against the Euro. If the “risk currencies” (AUD, Euro and CAD) will fall today, they might also bring down the gold and silver prices during the day.
Current Gold and Silver Prices
The precious metals prices are currently traded down in the European markets:
Current gold price short term future (November 2011 delivery) is traded at $1,629. 0 per t oz. a $18 or 1.09 % decrease as of 11:12*.
Current silver price short term future (November 2011 delivery) is at $31.110 per t oz – a $0.167 or 0.53% decline as of 11:11*.
The current ratio of gold to silver prices is at 52.36.
Gold and Silver Prices Outlook:
Gold and silver prices fell along with other major commodities but they still are above their initial price level from the beginning of the month. The speculation around the ramifications of the European debt crisis moves the markets in different direction nearly on daily basis. The upcoming news form the U.S. including the Philly Fed Manufacturing Index and Existing Home Sales may pull up the markets if they will present above than expected results. On the other hand, moderate changes in either way may not have much effect on gold and silver prices. Thus, the speculation around the European debt crisis is likely to continue affecting the financial markets including precious metals over slight changes in the US economy’s indicators.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13:30 –U.S. Unemployment Claims
15:00 – U.S. Existing Home Sales
15.00 – Philly Fed Manufacturing Index
15:30 – EIA report on U.S. Natural Gas Market
08:40 – ECB Press Conference Trichet Speaks
09:00 – German Business Climate Survey
13:00 – Canadian Core CPI
For further reading:
- Weekly Outlook for October 17-21
- Gold and Silver Prices Monthly Outlook for October 2011
- Gold & Silver Prices | Weekly Recap 10-14 October
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.