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Guest Commentary: Gold and Silver Outlook for 11.21.2012

By Lior Cohen, Commodities Analyst at Trading NRG,
21 November 2012 13:11 GMT

The prices of precious metals continue seek direction as both metals changed direction and declined yesterday. Precious metals' fall coincided with the decline in other related markets such as crude oil and stocks. Bernanke's speech referred to the importance of Congress to tackle the "fiscal cliff" but didn't refer to the role the Fed will take in case Congress won't act. EU ministers didn't reach an agreement on Greek bailout and the IMF also impeded the progress of this issue. Japan's trade balance report revealed a drop in imports and exports; this report suggests the Japanese economy isn't expanding. On today's agenda: China Manufacturing PMI, Minutes of MPC Meeting, Great Britain Net borrowing, and German 10 Year Bond Auction.

On Tuesday, the price of gold declined by 0.62% to $1,723.6; Silver price also decreased by 0.78% to $32.93. During the month, gold rose by 0.26%; silver, by 1.9%.

As seen below, the chart shows the developments in the normalized prices of precious metals during the month (normalized to 100 as of October 31st).

112112_Gold_and_Silver_Outlook_for_11.21.2012_body_1121.jpg, Guest Commentary: Gold and Silver Outlook for 11.21.2012

China flash Manufacturing PMI: as of the previous report for October, the Manufacturing PMI increased to 49.1, which means the manufacturing sectors are still contracting; this index indicates the developments in China's manufacturing sectors growth rate; if the index will increase, this may positively affect commodities;

Minutes of MPC Meeting: in the recent MPC meeting it was announced the rate will continue to be 0.5% and the asset purchase program at £375 billion; the MPC still has concerns regarding GB's inflation. The minutes of the recent meeting might offer some information behind this decision;

Daily Outlook

The prices of gold and silver changed direction and declined yesterday along with the rest of the market including stocks, and crude oil. This downward trend may continue today as the EU leaders continue to prolong the negotiations with end in sight. This situation is likely to continue pulling down the Euro and other "risk currencies" and consequently bullion prices. The upcoming report regarding China's manufacturing PMI could have a positive effect if the PMI will pass the 50 point mark. Finally, if the Euro and other "risk currencies" will decline against the USD, then they are likely to pull down precious metals.

For further reading: Gold And Silver Outlook For November 19-23

By: Lior Cohen, M.A. in Economics, Commodities Analyst and Blogger at Trading NRG

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21 November 2012 13:11 GMT