The prices of gold and silver didn’t’ do much yesterday and their price volatility remain low. This all could change today and tomorrow and the FOMC will release the minutes of its last meeting. This report could offer some information and clues regarding the future steps of the Fed. Bernanke’s recent speech didn’t offer additional news regarding the Fed’s monetary policy. The speech also didn’t stir up the markets. On today’s agenda: MPC Asset Purchase and Rate Votes, U.S Core Consumer Price Index, U.S. Retail Sales Report, U.S. Existing Home Sales, Minutes of the last FOMC Meeting, Governor Poloz speaks, China Manufacturing PMI, Japan’s monetary policy meeting and press conference.
Here is a short review for precious metals for Wednesday, November 20th:
Gold and Silver – November Review
On Tuesday, gold slightly rose by 0.09% to $1,273.5; Silver slipped by 0.11% to $20.33 – its lowest rate since August 2013. During November, gold declined by 3.79%; silver, by 6.86%. 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 fallen during November.
The ratio between the two precious metals slightly rose again on Tuesday to 62.63. During November, the ratio rose by 3.30% as silver has moderately under-performed gold.
The little movement in the prices of gold and silver has also represented in the drop in the standard deviation of these precious metals’ prices. The standard deviation of daily change of gold price is 0.91% – the lowest level since March 2013. Silver’s standard deviation of daily change 1.56% – the lowest mark since May 2013.
Minutes of the FOMC Meeting: Back in October, the FOMC meeting ended with no major news or change to its monetary policy. The FOMC didn’t hold a press conference following the October statement. The market reaction was very mild. The main issue remains the uncertainty around the future steps of the FOMC vis-à-vis its asset purchase program that continues to push precious metals prices in different direction. The current belief is that the Fed will hold off tapering QE3 until 2014. But some speculate the tapering could be announced at the end of 2013 at the last FOMC meeting of the year. The upcoming minutes might shed some light on this issue, which could stir up the markets again;
MPC Asset Purchase and Rate Votes: In the past MPC meeting, the Bank left the rate unchanged at 0.5% and the asset purchase program at £375 billion; this vote count will show how many MPC members voted on any changes to the asset purchase program or interest rate;
U.S Core Consumer Price Index: According to the U.S Bureau of Labor statistics, during September, the CPI edged up by 0.2% (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;
U.S. Retail Sales Report: This monthly report refers to October; in the previous report regarding September, retail sales inched down by 0.1% (month-over-month); core retail sales rose by 0.4%; this report could signal the developments in U.S’s gasoline demand and thus may affect U.S oil prices;
U.S. Existing Home Sales: This report will show the shifts in U.S. existing home sales during October 2013; in the last report regarding September 2013 the number of homes sold slipped to a seasonally adjusted annual rate of 5.29 million houses; if this trend persists, it might adversely affect the U.S dollar;
Governor Poloz speaks: The Governor of Bank of Canada is due to testify, along with Senior Deputy Governor Tiff Macklem, before the Senate Standing Committee on Banking, Trade, and Commerce, in Ottawa; his words could affect the direction of the Canadian dollar;
China Manufacturing PMI (flash): HSBC will release its flash manufacturing PMI survey for November. Last month’s report regarding October 2013 the Manufacturing PMI slipped to 50.9 – i.e. China’s manufacturing sectors is growing but at a slightly slower pace. If in the upcoming update the PMI index changes direction and rises, it could signal progress in China’s economy;
Japan’s monetary policy meeting and press conference: In the next Japanese monetary policy meeting, BOJ members will announce of any changes to the bank’s current asset purchase program. This decision may affect the Japanese yen;
Currencies / Precious Metals Correlations – November Update
On Tuesday, the Eur/USD currency pair rose by 0.24% to 1.3538. During November, the Eur/USD slipped by 0.34%. Further, other currencies such as the Aussie dollar also appreciated yesterday against the U.S dollar by 0.61%. The correlations among gold, silver and Euro remained robust in recent weeks, e.g. the correlation between the Euro/USD and gold price is 0.72 during October/November.
Here is a reminder of the main events and publications that are scheduled for today and tomorrow (all times GMT):
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
09:00 – Flash German, French and Euro Zone Manufacturing PMI
09:05 –Governor Stevens speaks
13:30 – U.S. Jobless Claims
13:30 – U.S. Producer Price Index
15:00 – Philly Fed Manufacturing Index
For further reading:
- Gold and Silver Outlook for November 2013
- Gold and Silver Weekly Forecast for November 18-22
- Weekly Outlook of Financial Markets for November 18-22
- Gold and Silver Yearly Outlook For 2013
- Is the Golden Era of Gold Over?