Gold and Silver Forecast for January 7th

The prices of gold and silver slowly rose during the part several days. The low volume of trade may have contributed to the recovery of gold and silver. This could change in the coming days as the volume is likely to pick up. The main evens of the week are the U.S non-farm payroll report and minutes of the FOMC meeting. These two news items could affect the prices of precious metals. On today’s agenda: EU CPI Flash Estimate, American Australian and Canadian Trade Balance.

Here is a short overview for precious metals for Tuesday, January 7th:

Gold and Silver – January Review                             

On Monday, gold inched down by 0.05% to $1,238; Silver, by 0.52% to $20.10. During January, gold rose by 2.97%; silver, by 3.92%. In the chart below are the normalized rates of bullion for the past several weeks (normalized to 100 as of November 29th). The prices of gold and silver have moved in an unclear trend in recent weeks.

Gold and silver Chart 2014  January 7The ratio between the two precious metals rose on Monday to 61.60. During January, the ratio slightly slipped by 0.97% as silver has moderately out-performed gold.

Gold  to silver ratio Chart 2014  January 7The gold and silver futures volumes of trade have picked up and reached on Monday 167 thousand and 41 thousand, respectively. No surprise, the highest levels in the past couple of weeks. The volume of trade is likely to keep rising in the following days. The low volume of trade in recent weeks may have enabled gold and silver to rally. This trend may change course in the coming days.

volume Gold & silver prices 2014  January 7On Today’s Agenda

Australian Trade Balance: The forthcoming report will refer to November. In the previous update, for October, the seasonally adjusted balance of goods and services reached a $529 million deficit. The export of non-monetary gold rose by $146 million; if gold exports continue to rally, it might suggest a rise in demand for non-monetary gold (see here latest update);

EU CPI Flash Estimate: This index calculates the annual consumer price index of the Euro Area. Based on the recent estimate, the annual CPI rose to 0.9%, which is still well below the ECB’s target inflation of 2%. If the inflation rate continues to rise, this could indicate the EU economy is progressing. These developments could influence the ECB members with respect to ECB’s cash rate decision later this week;

Canadian Trade Balance: In the previous update regarding October 2013, exports slipped by 0.3% and imports fell by 1.2%; as a result, the trade balance moved from $1.1 billion deficit in September to $75 million surplus in October; this report may affect the Canadian dollar, which tends to be linked with commodities;

American Trade Balance: This monthly update for November will present the changes in imports and exports of goods and services to and from the U.S, such as commodities such as oil and gas; based on the last American trade balance update regarding October the goods and services deficit narrowed to $40.6 billion;

Currencies / Precious Metals Correlations – January Update

On Monday, the Eur/USD currency pair rose by 0.29% to 1.3629. During January, the Eur/USD decreased by 0.83%. Further, other currencies such as the Aussie dollar also slightly appreciated yesterday against the U.S dollar by 0.25%. The correlations among gold, silver and Euro have further weakened again in recent weeks, e.g. the correlation between the USD/CAD and gold price is only 0.28 during December/January. This could suggest the shifts of the gold and silver prices have little to do with the changes in the forex market.  


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


02:30 – Australian Trade Balance

10:00 – EU CPI Flash Estimate

13:30 – Canadian Trade Balance

13:30 –American Trade Balance


10:00 – EU Retail Sales

10:00 – EU Unemployment Rate

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

Tentative – U.S 10 Year Bond Auction

19:00 – Minutes of the last FOMC Meeting

For further reading: