Gold and silver prices sharply declined on the first day of November; this movement was probably driven in part by the news from Greece of a referendum. Today the FOMC will release a statement and Bernanke will also give a speech. Currently gold and silver prices are traded up. Today, the ADP of U.S. employment estimate will be published and the Australian Retail Trade report.
Here is a market outlook of precious metals prices for today, November 2nd:
Gold and Silver Prices – November Update
Gold price declined on Tuesday by 0.78% to $1,711.8; silver price also sharply fell by 4.72% to $32.73. The chart below shows the changes in gold and silver prices since October 20th (normalized gold and silver prices (October 20th 2011=100)). During the week (so far), gold price decreased by 2.0% and silver prices by 7.2%.
The ratio between gold and silver prices sharply rose on Tuesday, November 1st to 52.30. During the week, silver price declined by a larger rate than gold price as the ratio rose by 5.6%. The chart below shows the developed of this ratio since August.
Following last week’s EU agreement on a reduction on the Greek debt, yesterday it was announced that Papandreou, Prime Minister of Greece, has put the European Union’s debt plan to a referendum. This move puts the recent EU agreement on debt reduction for Greece at risk if it won’t pass by the Greek voters (see here for more on this subject).
Sarkozy and Merkel agreed to meet with Papandreou today, Wednesday November 2nd in Cannes, France in order to talk the recent turn of events. This news may have been among the key factors to push major currencies such as Euro and CAD down against the USD. This news is also among the factors that affected gold and silver prices to fall via the strengthening of the USD.
On Today’s Agenda:
ADP Estimate of U.S. Change Employment: ADP will give an estimate in the U.S employment for October;
FOMC Meeting (Statement): in the recent FOMC meeting the Federal Open Market Committee came up with its plan to purchase $400 billion worth of LT securities. The FOMC may consider additional steps even though there was a rally in the U.S stock markets during October. Following the FOMC meeting the Chairman of the Federal Reserve, Ben Bernanke, will talk about the recent FOMC meeting and may provide headlines that could affect the financial markets;
Australian Retail Trade: In the last report regarding August, the seasonally adjusted retail trade slightly inclined by 0.3% (M-2-M). This news may affect AUD traders and consequently commodities that Australia exports;
Forex Exchange Rates / Gold & Silver Prices – November
The Euro to U.S Dollar exchange rate sharply declined on Tuesday by 1.12% to reach 1.3703 – the lowest level since January 12th. The recent involvement of Japan in the forex exchange rate markets and the recent news of Greece’s referendum may have been among the factors to drive major currencies such as EURO and AUD to drop against the USD and consequently may also be a partial explanation for the recent decline in gold and silver prices. If there will be a correction in the Euro and AUD, it could also affect bullion prices to make a comeback.
U.S. Treasuries / Gold & Silver Prices – November
The U.S. 10-year Treasury yield continued to decline on Tuesday by 0.16 percent points to 2.01%; during the week the 10 year treasury yield dropped by 0.33 percent point. The LT yields sharply fell in the past few business days and coincided with the sharp falls in gold and silver prices. If the yields will continue to fall, this might indicate a slowdown in the growth for risk appetite in the financial markets; this shift may also curb the demand for commodities.
S&P500 / Gold & Silver Prices – November
The S&P500 index sharply declined on Tuesday by 2.79% to reach 1,218.28 – the lowest level since October 20th; during the week the S&P500 index shed 6.48% off its value. During the past couple of weeks, the correlations among the S&P500 index and gold and silver prices were positive and moderately strong, which means that, as oppose to previous months, the recent rally in precious metals prices coincided with the sharp gains in S&P500 index. If the stock markets will continue to decline, this may also affect precious metals prices to decrease.
Current Gold and Silver Prices Per Ounce
The precious metals prices are currently traded up in the European markets:
Current gold prices per ounce short term future (December 2011 delivery) is traded at $1,730.3 per t oz. a $18.5 or 1.08% increase as of 13:29*.
Current silver prices per ounce short term future (December 2011 delivery) is at $33.805 per t oz – a $1.074 or 3.28% incline as of 13:29*.
The current ratio of gold to silver prices per ounce is at 51.17.
Gold and Silver Prices Outlook:
The sharp declines in gold and silver prices in the past couple of days coincided with the sharp falls in the stock and Forex markets and the increased demand for LT U.S. securities. This shift in the markets might indicate the cooling off the markets for riskier financial instruments. It also seems that traders considered gold and silver more risky than in previous months. The FOMC meeting might stir up the markets if there will be a new stimulus plan, or even a hint of one in the making. The movement of gold and silver prices is likely to continue to coincide with the changes in the in major forex currencies such as YEN, EURO and AUD against the USD.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13.30 – ADP estimate of U.S. change in non-farm employment
15:30 – EIA Report on Crude Oil Stockpiles
17:30 – FOMC Meeting (Statement)
19:15 – FOMC Press Conference – Bernanke Speaks
1:30 – Australian Retail Trade
All Day –G20 Meeting
13:30 – Department of Labor Report – U.S. Unemployment Claims
13:30 – ECB Press Conference and Euro Rate Decision
15.00 – U.S. ISM Non-Manufacturing PMI
15:30 – EIA report on U.S. Natural Gas Market
1:30 – Reserve Bank of Australia – Monetary Policy Statement
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