Gold price continued last week’s downward trend and declined on Monday. Silver price remained nearly unchanged. The recent fall of gold coincided with the drop of the Euro and Aussie dollar against the USD. Nonetheless, the volatility of both precious metals has eased down and may remain so in the coming days. Yesterday, pending home sales slipped by 0.6% to 102.1 during October. This news didn’t seem to have much effect on the forex, stocks and commodities markets. Will gold and silver continue to fall? On today’s agenda: Great Britain Inflation report hearing, U.S. Housing Starts and Building Permits, and U.S Consumer Confidence.
Here is a short overview for precious metals for Tuesday, November 26th:
Gold and Silver – November Overview
On Monday, gold declined again by 0.23% to $1,241.2; Silver inched up by 0.1% to $19.88 – its lowest level since August. During November, gold declined by 6.23%; silver, by 8.93%. In the chart below are the normalized prices of bullion for 2013 (normalized to 100 as of October 31st). The prices of gold and silver have had a downward trend in recent weeks.
The gold and silver futures volumes of trade have risen from last week and reached on Monday 264 thousand and 91 thousand, respectively. If the volume starts continues to increase in the coming days, this could imply the odds of sharp change in the rates of gold and silver as a result of low volume will rise.
St. Deviation of Gold and Silver
The slow movement of both bullion rates is represented in the drop in precious metals prices’ volatility during November compared to previous months: the standard deviations of gold and silver (daily percent changes) reached 0.84% and 1.39%, respectively.
Great Britain Inflation report hearing: In these hearings BOE Governor is expected to testify and refer to the British inflation and the bank’s economic outlook in front of Parliament’s Treasury Committee;
U.S. Housing Starts: This report was historically linked with gold price – as housing starts increased, gold prices tended to fall the next day (even when controlling to the U.S dollar effect); in the recent monthly report, in August 2013, the adjusted annual rate reached 891,000, which was 0.9% above the previous month’s housing starts pace;
U.S. Building Permits: In the recent update, during August, building permits fell by 3.8% (m-o-m) as the adjusted annual rate of building permits reached 918,000. If building permits continue to fall, it may indicate that the U.S housing market is cooling down (the recent U.S building permits update);
U.S Consumer Confidence: According to the last monthly report, for October, the consumer confidence index plummeted to 71.2 (month-over-month). The current expectations are that the November index may further decline; this report might weaken the USD;
Currencies / Precious Metals Correlations – November Update
On Monday, the Eur/USD currency pair slipped by 0.30% to 1.3517. During November, the Eur/USD fell by 0.49%. Further, other currencies such as the Aussie dollar also slightly depreciated yesterday against the U.S dollar by 0.24%. The correlations among gold, silver and Euro slightly weakened but is still robust, e.g. the correlation between the Euro/USD and gold price is 0.50 during November. The chart below shows the linear correlations among leading currencies pairs and precious metals percent changes.
10:00 – Great Britain Inflation report hearing
13:30 – U.S. Housing Starts
13:30 – U.S. Building Permits
15:00 – U.S Consumer Confidence
09:00 – Gfk German Consumer Climate Survey
09:30 – Second estimate of GB GDP Q3 2013
13:30 – U.S. Jobless Claims Weekly update
13:30 – U.S Core Durable Goods
For further reading:
- Gold and Silver Outlook for November 2013
- Gold and Silver Weekly Forecast for November 25-29
- Weekly Outlook of Financial Markets for November 25-29
- Gold and Silver Yearly Outlook For 2013