Gold and Silver – Daily Outlook for October 29th

The gold and silver market kicked off the week with a slow start as both precious metals prices slipped yesterday. This rally of the past couple of weeks may have reached a halt. The depreciation of the Euro and Japanese yen coincided with the decline of bullion prices. Yesterday, pending home sales report came out as the index declined 5.6% to 101.6 in September. This news, however, seems to have had little impact on the financial markets. Will gold and silver continue to fall this week? On today’s agenda: U.S. Consumer Confidence, Gfk German Consumer Climate Survey, U.S PPI and Retail Sales Report.

Here is a short overview for precious metals for Tuesday, October 29th:

Gold and Silver – October Review                             

On Monday, gold inched down by 0.03% to $1,351.9; Silver also slipped by 0.48% to $22.50. During October, gold increased by 1.89%; silver rose by 3.77%. In the chart below are the normalized prices of bullion for 2013 (normalized to 100 as of September 30th). The prices of gold and silver have rallied in recent weeks.

Gold and silver Chart 2013 October 29

The ratio between the two precious metals slightly rose on Monday to 60.08. During October, the ratio decreased by 1.81% as silver has slightly out-performed gold.

Gold to silver ratio Chart 2013 October 29

The gold and silver futures volumes of trade have risen and reached on Monday 130 thousand and 29 thousand, respectively. If the volume further picks up in the coming days, this could suggest the odds of sudden sharp change in the rates of gold and silver as a result of high volume will increase.

volume Gold & silver prices 2013 October 29On Today’s Agenda

Gfk German Consumer Climate Survey: This survey estimates Germany’s consumers’ economic climate (past and future economic conditions – on a monthly basis) for October. In the latest report for September 2013, the climate index slightly rose to 7.1; 

U.S. Retail Sales Report: This monthly report shows the developments in retail sales and food services for September; in the latest report regarding August, the retail sales edged up by 0.2% from the previous month;

U.S. PPI: In the last report regarding August, this index for finished goods slightly rose by 0.3% compared with July’s level and the core PPI remained unchanged; this news might affect the USD;

U.S Consumer Confidence: Based on the previous monthly report, for September, the consumer confidence index slipped to 79.7 (month-over-month). The current expectations are that the October index may further fall; this report might weaken the USD;

Currencies / Precious Metals Correlations – October Update

On Monday, the Euro/ USD currency pair slid by 0.12% to 1.3785. During October, the Euro/USD rose by 2.20%. Moreover, other currencies such as the Japanese yen slightly depreciated yesterday against the U.S dollar by 0.27%. The correlations among gold, silver and Euro remained strong in recent weeks, e.g. the correlation between the Euro/USD and gold price is 0.59 during October. The chart below shows these correlations.

Correlation Gold and EURO USD 2013 October 29 

Here is a reminder of the main events and publications that are scheduled for today and tomorrow (all times GMT):

Today

07:00 – Gfk German Consumer Climate Survey

13:30 –U.S. Retail Sales Report

13:30 – U.S. Producer Price Index

15:00 – U.S Consumer Confidence

Tomorrow

08:00 – KOF Economic Barometer

08:00 – Flash Spain’s GDP Q3 2013

13:15 – ADP estimate of U.S. non-farm payroll

13:30 – U.S Core Consumer Price Index

19:00 – FOMC Meeting and Statement

Tentative – Japan’s monetary policy meeting and press conference

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