Gold and silver prices slipped again for the second consecutive time this week. The rally of the USD against the Euro and Japanese yen coincided with the drop of precious metals prices. Yesterday, U.S retail sales report came out: The retail sales inched down by 0.1% from the previous month; consumer confidence tumbled down to 71.2 – its lowest level since August 2011. Finally, U.S PPI declined by 0.1% from the previous month and the PPI excluding food and energy edged up by 0.1%. These news items suggest little progress in the U.S economy, which could eventually pull down the USD. The main news item for today is the FOMC statement following a two day meeting. If the FOMC changes its monetary policy, it could stir up the financial markets. Alas, this scenario seems unlikely. On today’s agenda: Japan’s monetary policy meeting and press conference, Flash Spain’s GDP Q3 2013, ADP estimate of U.S. non-farm payroll, U.S Core Consumer Price Index, FOMC Meeting and Statement.
Here is a short overview for precious metals for Wednesday, October 30th:
Gold and Silver – October Review
On Tuesday, gold fell again by 0.50% to $1,345.2; Silver also slipped by 0.20% to $22.46. During October, gold increased by 1.39%; silver rose by 3.56%. In the chart below are the normalized rates of bullion for 2013 (normalized to 100 as of September 30th). The prices of gold and silver have risen in recent weeks.
The ratio between the two precious metals slightly fell on Tuesday to 59.90. During October, the ratio decreased by 2.10% as silver has slightly out-performed gold.
The gold and silver futures volumes of trade have increased again and reached on Tuesday 143 thousand and 33 thousand, respectively. If the volume continues to rise 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 rise.
FOMC Meeting and Statement: The seventh FOMC meeting this year will take place during October 29th and 30th. The FOMC will decide whether it will taper QE3. This time, a press conference isn’t scheduled. Considering the recent U.S government shutdown and the little progress in the U.S labor market, it seems unlikely the FOMC will change its policy this time. If the Fed doesn’t change its monetary policy, gold and silver prices may continue their rally; the table below shows the bullion market’s reaction to the FOMC statements in the past couple of years.
Flash Spain’s GDP Q3 2013: This report will present the first estimate of the quarterly growth rate of the Spain’s economy in the third quarter of 2013; during the second quarter Spain’s economy contracted by only 0.1% (Q-2-Q);
ADP estimate of U.S. non-farm payroll: ADP will come out with its estimate for the next U.S non-farm payroll changes for October 2013 that will be published next week;
U.S Core CPI: Based on the U.S Bureau of Labor statistics, during August, the CPI inched up by 0.1% (month-over-month); the core CPI also slightly rose by 0.1%; this report could affect the direction of the USD and may also affect the FOMC’s monetary policy;
Japan’s monetary policy meeting and press conference: In the upcoming Japanese monetary policy meeting, BOJ members will decide on any changes to the bank’s current asset purchase program. This decision may affect the Japanese yen;
Here is a reminder of the main events and publications that are scheduled for today and tomorrow (all times GMT):
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
13:30 – U.S. Jobless Claims
13:30 – Canada’s GDP by Industry
For further reading:
- Gold and Silver Outlook for October 2013
- Gold and Silver Weekly Forecast for October 28- November 1
- Weekly Outlook of Financial Markets for Oct 28- Nov 1
- Gold and Silver Yearly Outlook For 2013