Gold & Silver Prices – Daily Outlook November 3

Gold and silver prices slightly inclined yesterday after they had declined in recent days. The FOMC meeting may have helped pull up the financial markets as Bernanke left the door open on additional steps by the Fed to jump-start the U.S economy. Currently gold and silver prices are traded up. Today, the ECB rate decision will be made, the G20 meeting, the U.S. ISM Non-Manufacturing PMI report will be published and the U.S. Unemployment Claims report.

Here is a market outlook of precious metals prices for today, November 3rd:

Gold and Silver Prices – November Update

Gold price inclined on Wednesday by 1.04% to $1,729.6; silver price also sharply rose by 3.70% to $33.94. 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 1.0% and silver prices by 3.8%.


Gold price forecast & silver prices outlook 2011 November 3

The ratio between gold and silver prices sharply fell on Wednesday, November 2nd to 50.96. During the week, silver price declined by a larger rate than gold price as the ratio rose by 2.9%. The chart below shows the developed of this ratio since August.

Ratio Gold price forecast & silver prices outlook 2011 November 3

 Bernanke Keeps Door Open on Stimulus Plan

The Federal Open Market Committee decided to keep the monetary policy in the same direction including keeping the interest rates low and the LT securities purchasing plan. But The Fed chairman, Ben Bernanke, kept the door open of an additional stimulus plan in the near future to help fight the high unemployment rate. If there will be such as plan it could also affect the gold and silver prices. For now, this news from yesterday may have helped rebound gold and silver prices.

On Today’s Agenda:

ECB Press Conference and Euro Rate Decision: The rate decision will be the first one of the new President of the European Central Bank, Mario Draghi. Last month ECB kept the interest rate unchanged at 1.5%. According to the last Euro Area inflation rate report, the inflation grew to 3.0% (annual terms) in September 2011. With respect to the recent EU debt agreement there is a chance that the ECB will lower the rate by 0.25 percent points. If this will be the case it could sharply affect not only the Euros to US dollar exchange rate, but also major commodities prices such as gold and silver;

All Day –G20 Meeting: in this meeting (will be spread over two days) the financial ministers of the G20 countries will discuss the current European economic debt crisis and its ramifications;

U.S. Unemployment Claims: initial claims fell by 2,000 to 402,000 claims for the week ending on October 22nd; the number of insured unemployment reached 3.645 million, a decrease of 96,000 during the week of October 15th; the upcoming report may affect commodities traders;

U.S. ISM Non-Manufacturing PMI: This report will present the changes of non-manufacturing sector during October 2011. In September this index slightly slipped to 53.0%; this index might affect forex and commodities traders (see here last report).

Forex Exchange Rates / Gold & Silver Prices – November

The Euro to U.S Dollar exchange rate also bounced back and slightly inclined on Wednesday by 0.33% to reach 1.3748. This rebound is probably related in part to the FOMC meeting and a slight correction to the sharp falls in recent days. If the Euro and other riskier currencies such as AUD will resume their descent, it could also affect gold and silver prices to fall.

U.S. Treasuries / Gold & Silver Prices – November

The U.S. 10-year Treasury yield changed direction and slightly inclined on Wednesday by 0.02 percent points to 2.03%; during the week the 10 year treasury yield dropped by 0.31 percent point. The LT yields sharply fell in recent days and coincided with the sharp declines of gold and silver prices. If the yields will continue to decline, this might indicate a slowdown in the growth for risk appetite in the financial markets; this shift may also curb the demand for gold and silver.

S&P500 / Gold & Silver Prices – November

The S&P500 index rose on Wednesday by 1.61% to reach 1,237.90, but during the week the S&P500 index shed 3.67% off its value. During the past couple of weeks, the correlations among the S&P500 index and gold and silver prices were positive, which is consistent with the positive relation of gold and silver prices with the 10 year notes’ yields: this means that there might be a shift in the precious metal’s markets as gold and silver are being treated less of a safe haven instruments. If the stock markets will continue to fall, 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 American markets:

Current gold prices per ounce short term future (December 2011 delivery) is traded at $1,754.3 per t oz. a $24.70 or 1.43% increase as of 15:12*.

Current silver prices per ounce short term future (December 2011 delivery) is at $34.050 per t oz – a $0.107 or 0.32% incline as of 15:12*.

The current ratio of gold to silver prices per ounce is at 51.51.

(* GMT)

Gold and Silver Prices Outlook:

The slight bounce back in gold and silver prices yesterday may have been a correction to the sharp falls of the past couple of days; the recent downward trend coincided with the sharp declines 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. The news of the FOMC meeting may have helped to pull up the markets, but isn’t likely to resonate, because there weren’t any earth shattering news. Today’s ECB rate decision might stir up the financial markets, if the ECB new president will decide to cut the interest rates.     The changes in gold and silver prices are likely to keep on coinciding with the changes in the in major forex exchange rates such as USD/YEN, EURO/USD and AUD/USD. 

Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):


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

Bernanke Speaks

1:30 – Australian Retail Trade


All Day –G20 Meeting

12:00 – German Factory orders

12:00 – Canada Unemployment Rate and Employment Report

13.30 – U.S. Unemployment Rate & Non-farm Employment

13.30 – Canada Building Permits

13:30 – ECB Press Conference and Euro Rate Decision

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Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.