Gold and silver prices started the week falling despite the gains recorded in the stock markets and the moderate increase in Euro and AUD against the USD. Will S&P downgrade the Euro Zone countries’ credit rating? How, if any will this news affect gold and silver prices? Today, the Germany’s Factory orders report will be published, Australia’s GDP report for the third quarter and BOC will announce Canada’s overnight rate decision. Currently, gold and silver are traded down.
Here is a market outlook of precious metals prices for today, December 6th:
Gold and Silver Prices –Update
Gold price declined on Monday by 0.96% to $1,734.5; silver price also declined by 0.96% to $32.37. The chart herein presents the changes of gold and silver prices in the past few weeks (normalized gold and silver prices to November 17th 2011). During December gold price slightly declined by 0.9% and silver price by 1.3%.
The ratio between gold and silver prices remained unchanged on Monday, December 5th at 53.58. During the month the ratio slightly rose by 0.4% as gold price slightly outperformed silver price.
S&P May Downgrade Germany and Frances’ Credit Rating
This announced should surprise the financial markets: the leading rating agency Standard and Poor’s threatens to downgrade all the Euro Zone countries’ credit rating including the credit rating of Germany and France, if the leaders of the EU won’t manage to reach an agreement amongst themselves on the steps needed to take to resolve the European debt crisis. This means that Germany and France might lose their perfect credit rating of AAA. The EU leaders will convene in Brussels over the upcoming weekend. I think that considering the recent handling of the EU leaders in recent months, it’s very unlikely that a big plan to save the Euro Zone will come up from this summit.
Even if the downgrade will occur, it could affect for the short term on these countries’ debt raising ability and perhaps even further down trade the Euro, but since the markets already adjusted to the instability of the Euro zone, the effect of this downgrade won’t linger long.
In the mean time this announced might adversely affect the Euro and consequently also affects gold and silver prices to decline.
U.S. Non-Manufacturing PMI reached 52%
Yesterday, the U.S. non-manufacturing ISM report was published: according to the report and the U.S. non-manufacturing PMI reached 52% in November; the growth rate slightly declined again from 52.9% in October to 52% in November i.e. a 0.9 percent points decrease. This means that while the US non-manufacturing sector is still growing, it grew during November by a slightly slower pace than in October. This news may have also affected commodities to trade slightly down.
On Today’s Agenda
German Factory orders: this report will present the changes in the Germany factory orders and could indicate the progress of the German Economy and consequently could affect forex and commodities traders;
Canada Overnight Rate: The Bank of Canada will publish its decision regarding the overnight interest rate, which remained unchanged at 1% during the last decision. The BOC may continue its policy of keeping the interest rate unchanged. This decision may affect the Canadian dollar exchange rate and consequently also influence precious metals prices;
Australian GDP Q3: This quarterly report will show the change in Australia’s GDP growth rate in the third quarter 2011 compared with the second quarter of 2011. In the last report regarding Q2 2011, the GDP expanded by 1.2% in annual terms (seasonally adjusted).
Forex Trading / Gold & Silver Prices – Update
The Euro to U.S Dollar exchange rate slightly inclined on the first day of the week by 0.07% to 1.3401. Other forex currencies such as the Canadian dollar and Yen also appreciated against the US dollar. The positive correlations between gold and silver prices and forex exchange rates may affect gold and silver prices throughout the day especially following the news of the threat of credit rate downgrade hanging over the Euro zone.
Current Gold and Silver Prices
The major precious metals are currently traded down in the European markets:
Current gold price per ounce short term future (January 2012 delivery) is traded at $1,722.40 per t oz. a $12.1 or 0.70% decrease as of 09:17*.
Current silver price per ounce short term future (January 2012 delivery) is at $32.155 per t oz – a $0.217 or 0.67% decline as of 09:16*.
Gold and Silver Prices Outlook:
Gold and silver prices started the month with moderate falls and may continue this downward trend during the day over the S&P’s announcement that could downgrade Euro Zone credit rating and adversely affect gold and silver prices for the short term. The upcoming reports and decisions from Europe, Canada and Australia might curb some of these falls in gold and silver prices if these reports will be positive.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
12:00 – German Factory orders
14:00 – Canada Overnight Rate
2:30 – Australian GDP Third Quarter 2011
10:30 – Great Britain Manufacturing Production
11:00 – German Industrial Production
15:30 – EIA Crude Oil Market Report
2:30 – Australia Rate of Unemployment
For further reading:
Monthly Analysis and Outlook: