Guest Commentary: Gold & Silver Daily Outlook 10.24.2011
Gold and silver ended the week with sharp rises after a week long of falls. Some consider that the rally of gold and silver is over and others consider there will be sharp gains during this week. All speculators look towards the EU summit as one of the catalysts that will push gold and silver prices. Today, ECB president Trichet will speak in an ECB Press Conference; the Euro Area Manufacturing PMI will be published.
Gold sharply inclined on Friday by 1.44% to $1,636.1; silver also sharply rose by 3.01% to $31.19. The chart below shows the changes in gold and silver during the month.
On Today's Agenda:
Euro Area Manufacturing PMI: In the last report regarding August, the Euro Zone Manufacturing PMI reached 48.4. This report will provide an indicator to the economic growth of the Euro zone economy and could influence the Euro/USD;
ECB Press Conference Trichet Speaks: Jean Claude Trichet, President of the European Central Bank, will probably refer to the recent EU Summit which was held yesterday (see below). This speech may affect not only exchange rates, but also major commodities;
Euro Summit – Round One for the Week
The first of two EU summit was held yesterday. This summit was the first of two summits that will be held this week (the next one will be on October 26th) and was the 13th summit in the past 21 months. In a nut shell, there were any big headlines from the recent summit as the European leaders didn't reach an agreement in restructuring the Greek debt: basically, the current rumors state that the banks offered a haircut of 40% of the Greek debt, while the EU leaders were pushing for at least a 50% haircut on debt. Germany was still warding off France's attempt to boost the EFSF. As long as there is uncertainty in this front, it's likely to keep gold and silver high.
USD / Gold & Silver– October
The Euro/USD inclined on Friday by 0.84% to reach 1.3896; other currencies also were traded up against the USD including CAD and AUD. If the "risk currencies" (AUD, Euro and CAD) will rise today, they might help push up gold and silver.
S&P500 / Gold– October
The S&P500 sharply inclined on Friday by 1.88% to reach 1,238.25; during October the S&P500 increased by 9.44%. The correlation between the U.S. stock market and gold shifted from negative correlation in the past three months to a moderate positive correlation. If this shift will continue and the precious metals prices' will have a positive correlation with the U.S. stock markets then it could indicate a shift in the market sentiment as traders are regaining some trust in the financial markets.
Gold and Silver Outlook:
Gold and silver sharply rose on Friday; gold and silver are currently traded up; as long as there is the ongoing debacle in the EU among the policymakers in dealing with the European debt crisis, there is probably good chance that this crisis will help keeping the gold and silver prices up. On the other hand, if the American GDP will show a sharp rise, it could curb the recent gains in the bullion markets.
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.
By: Lior Cohen, Energy Analyst for Trading NRG
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.