Gold and Silver – Daily Outlook for November 19th

The prices of gold and silver resumed their downward trend and as prices fell on Monday. Their recent fall came despite the little movement recorded in the forex market. Moreover, the USD continues to slowly depreciate against the Euro, yen and Aussie dollar. This trend in the forex market might eventually curb down the descent of precious metals prices. Will gold and silver bounce back from their recent fall? On today’s agenda: Bernanke’s Speech, Japanese Trade balance, and German ZEW economic sentiment.

Here is a short overview for precious metals for Tuesday, November 19th:

Gold and Silver – November Review                         

On Monday, gold fell by 1.17% to $1,272.3; Silver, by 1.79% to $20.36 – its lowest level since mid-August 2013. During November, gold declined by 3.88%; silver, by 6.76%. In the chart below are the normalized rates of precious metals for 2013 (normalized to 100 as of October 31st). The prices of gold and silver have declined in recent weeks.

Gold and silver Chart 2013  November 19

The ratio between the two precious metals slightly increased on Monday to 62.50. During November, the ratio rose by 3.09% as silver has moderately under-performed gold.

Gold  to silver ratio Chart 2013  November 19

The gold and silver futures volumes of trade haven’t changed much from last week and reached on Monday 125 thousand and 74 thousand, respectively. If the volume starts to rise in the coming days, this could imply the odds of sharp shift in the rates of gold and silver as a result of low volume will increase.

volume Gold & silver prices 2013  November 19On Today’s Agenda

Bernanke’s Speech: Chairman of the Federal Reserve Ben Bernanke will give a speech at the National Economists Club Annual Dinner: Herbert Stein Memorial Lecture; the title of the speech is Communication and Monetary Policy. He is likely to relay his message of the importance of the Fed keeping the public informed of its future monetary plan. This speech could drag down the prices of gold and silver if the Chairman refers to potential plans of  pushing back up the tapering of QE3 to the last FOMC meeting of the year;

German ZEW economic sentiment: Back in September, the ZEW indicator for Germany rose to 52.8 points; if Germany’s economic sentiment continues to increase, the Euro will plausibly strengthen against the US dollar;

Japanese Trade balance: Back in September 2013 the Japanese trade balance deficit expanded by 33% compared to August, and reach 1,091 billion yen (roughly $11.13 billion) deficit (seasonally adjusted figures). This sharp gain in deficit was due to the decline in exports (by 0.3%) and the rise in imports (by 3.8%);

Currencies / Precious Metals Correlations – November Update

On Monday, the Eur/USD currency pair inched up by 0.07% to 1.3506. During November, the Eur/USD slipped by 0.57%. Further, other currencies such as the Aussie dollar also slightly appreciated yesterday against the U.S dollar by 0.10%. The correlations among gold, silver and Euro remained strong in recent weeks, e.g. the correlation between the Euro/USD and gold price is 0.53 during November.  The chart below presents the linear correlations among leading currencies pairs and precious metals percent changes.

Correlation Gold and EURO USD 2013 November 19

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


10:00 – German ZEW economic sentiment

23:50 – Japanese Trade balance

00:00 – Bernanke’s Speech


09:30 –MPC Asset Purchase and Rate Votes

13:30 – U.S Core Consumer Price Index

13:30 –U.S. Retail Sales Report

15:00 – U.S. Existing Home Sales

19:00 – Minutes of the last FOMC Meeting

21:15 –Governor Poloz speaks

02:45 – China Manufacturing PMI

Tentative – Japan’s monetary policy meeting and press conference

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