Gold and silver prices took a dive and along with other commodities such as crude oil, the precious metals’ prices sharply declined yesterday; by doing so, the rally of gold price during November was erased in a single day. This fall may have been stem from the recent news from Fitch rating that U.S. banks are exposed to European debt and may be negatively affected by it. The Philly Fed slow down probably didn’t help as well. Currently gold and silver prices are traded slightly up. Today, the Canadian Core Consumer Price index will be published.
Here is a market outlook of precious metals prices for today, November 18th:
Gold and Silver Prices – November Update
Gold price sharply fell on Thursday by 3.05% to $1,720.2; silver price also sharply declined by 6.87% to $31.50. In the chart below you can see the rise and sharp fall of gold and silver prices during the past few weeks (normalized gold and silver prices to October 31st 2011). Due to yesterday’s sharp falls, gold price declined by 0.3% during November, and silver price declined by 8.3%.
The ratio between gold and silver prices sharply inclined on Thursday, November 17th to 54.61. During November, gold price fell by a lower rate than silver price so that the ratio rose by 8.8%.
The European Debt Crisis Update November 18th
It seems that there is a chance that the European debt crisis might also affect the U.S. banks: according to Bloomberg, Fitch Rating is reporting that U.S. banks may face “serious risk” as they are exposed to several European countries’ debt. These banks include, among other the JP Morgan, Citigroup and Goldman Sachs.
This news may have been among the factors that triggered yesterday’s panic that induced sharp falls in the stocks and commodities markets, including the precious metals’ market.
Yesterday, Italy’s new Prime Minister, Mario Monti, former EU competition commissioner, managed to pass his first confidence vote in the Senate of his new government. Monti will face another confidence vote of his new formed government.
U.S Housing Starts Slightly Declined in October
Yesterday, the new residential construction statistics for October 2011 was published and showed a sharp increase in building permits but a moderate slip in housing starts.
Since historically there was a supposed lagged by one day negative correlation between housing starts and gold price; i.e. as Housing starts annual rates decreases, gold price tend to rise the following day, there is a chance that this news will help rally gold price today.
Philly Fed Slightly Fell in November
Yesterday, the Philly Fed Manufacturing Index for November was published: it still showed growth in November but at a slower pace than in October as the Philly Fed index fell from +8.7 to +3.6. This news may have also helped pull the markets down during yesterday’s trading.
S&P500 / Gold & Silver Prices – November
The S&P500 index declined on Thursday by 1.68% to 1,216.13. During November, the correlations among the major American stock market indexes such as the S&P500 index and gold and silver prices were strong and positive; thus, if the stock market will continue to fall as it did in the past couple of days, it may also indicate that gold and silver prices are likely to decline.
Current Gold and Silver Prices Per Ounce
The precious metals prices are currently traded up in the European markets:
Current gold price per ounce short term future (December 2011 delivery) is traded at $1,730.5 per t oz. a $10.3 or 0.60% increase as of 09:12*.
Current silver price per ounce short term future (December 2011 delivery) is at $31.935 per t oz – a $0.438 or 1.39% incline as of 09:13*.
The current ratio of gold to silver prices per ounce is at 54.188.
Gold and Silver Prices Outlook:
Gold and silver prices sharply fell yesterday along with other major commodities prices such as crude oil prices perhaps over the news from the U.S. Since major exchange rates such as the Euro/USD didn’t change much yesterday, we are likely to rule out the recent tumble to be related to changes in the forex market. Yesterday’s falls are likely to affect today’s trading and we may see a moderate correction to the sharp declines in gold and silver prices.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
13:00 – Canadian Core CPI
For further reading:
Monthly Analysis and Outlook: