Gold and Silver – Daily Outlook for December 17th

The prices of gold and silver resumed their rally and rose again for the second consecutive day. This trend, however, might change direction if the Fed announces tomorrow the tapering of its asset purchase program. Today the FOMC starts its two day deliberations, which will conclude tomorrow. On today’s agenda: Minutes of Reserve Bank of Australia’s Monetary Policy Meeting, GB CPI, German ZEW economic sentiment, Euro Area CPI, Euro-Group Summits, U.S Core Consumer Price Index, BOE Governor Carney Testifies, Governor Stevens speaks, and Japanese Trade balance.

Here is a short overview for precious metals for Tuesday, December 17th:

Gold and Silver – December Review                          

On Monday, gold increased by 0.79% to $1,245.2; Silver, by 2.51% to $20.06. During December, gold declined by 0.42%; silver rose by 0.29%. In the chart below are the normalized rates of bullion for 2013 (normalized to 100 as of November 29th). The prices of gold and silver have rallied in the past couple of days.

Gold and silver Chart 2013  December 17The ratio between the two precious metals fell again on Monday to 62.09. During December, the ratio slightly rose by 0.47% as silver has moderately under-performed gold.

Gold  to silver ratio Chart 2013  December 17The gold and silver futures volumes of trade have declined and reached on Monday 85 thousand and 36thousand, respectively. The volume of trade is likely to remain low in the following days. The low volume of trade might enable gold and silver to change course and rally from their recent fall.

On Today’s Agenda

Minutes of Reserve Bank of Australia’s Monetary Policy Meeting: The Reserve Bank of Australia left its interest rate unchanged at 2.50%; the minutes of the recent monetary policy meeting may offer some insight behind its recent decision; this news may affect the Australian dollar and consequently commodities rates;

GB CPI (November 2013): In the previous monthly update regarding October 2013, the CPI fell to an annual rate of 2.2%; if the inflation rate continues its downward trend, it may eventually affect the BOE’s monetary policy;

German ZEW economic sentiment: The forthcoming report will refer to the ZEW indicator of economic sentiment for Germany for November. In October, the ZEW indicator for Germany rose to 54.6 points; if Germany’s economic sentiment continues to rise, the Euro will plausibly strengthen against other currencies including the US dollar;

Euro Area CPI: Based on the recent report, the annual CPI declined to 0.7%, which is well below ECB’s target inflation; if the inflation continues to decline, it could affect ECB’s monetary policy;

Euro-Group Summits: The summit will be held in Brussels; the EU ministers of finance and Euro-Group President may refer to the latest developments in Europe;

Canada Manufacturing Sales (October 2013): This report will pertain to the manufacturing sales in Canada as of October. It may affect the USD/CAD currencies pair, which is correlated with commodities. In the previous report regarding September 2013, manufacturing sales rose by 0.6%;

U.S Core Consumer Price Index: This monthly report refers to the main changes in the core consumer price index for November 2013. According to the U.S Bureau of Labor statistics, during October, the CPI inched down by 0.1% (month-over-month); the core CPI inched up again by 0.1%; this report could affect the USD and may also affect the FOMC’s monetary policy;

BOE Governor Carney Testifies: Governor Carney will testify before the House of Lords Economic Affairs Committee, in London;

Governor Stevens speaks: Reserve Bank of Australia Governor is due to testify before the House of Representatives Standing Committee on Economics, in Canberra; this speech may affect the Aussie dollar;

Japanese Trade balance: Back in October 2013 the Japanese trade balance deficit slightly contracted to 1,071 billion yen (roughly $10.4 billion) deficit (seasonally adjusted figures). Japan is among the leading importers of commodities, including crude oil and gold; its trade balance could offer information vis-à-vis Japan’s changes in demand for goods and services;

Currencies / Precious Metals Correlations – December Update

On Monday, the Eur/USD currency pair slightly increased by 0.14% to 1.3761. During December, the Eur/USD increased by 1.25%. Further, other currencies such as the Canadian dollar also moderately appreciated yesterday against the U.S dollar by 0.10%. The correlations among gold, silver and Euro have weakened again in recent weeks, e.g. the correlation between the Euro/USD and gold price is only 0.18 during November-December – its lowest level in weeks. This could suggest the developments in the gold and silver market have little to do with the movement of the US dollar in the forex market against other leading currencies.  


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


00:30 – Minutes of Reserve Bank of Australia’s Monetary Policy Meeting

09:30 – GB CPI

10:00 – German ZEW economic sentiment

10:00 – Euro Area CPI

All Day – Euro-Group Summits

13:30 – Canada Manufacturing Sales

13:30 – U.S Core Consumer Price Index

15:30 –BOE Governor Carney Testifies

21:30 –Governor Stevens speaks

23:50 – Japanese Trade balance


09:00 – German Ifo Business Climate Index

09:30 – Great Britain Claimant Count Change

09:30 –MPC Asset Purchase and Rate Votes

All Day – ECOFIN Summit

13:30 – U.S. Housing Starts

13:30 – U.S. Building Permits

19:00 – FOMC Meeting and Press Conference

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