Guest Commentary: Gold & Silver Daily Outlook 10.26.2011
Gold and silver sharply rose yesterday and recorded the sharpest gains during October. Does this mean there is a shift in the recent trend of gold and silver from downward to upward? Today, the second (this week) EU summit will be held in Brussels; in the summit there will an attempt to resolve the European debt crisis. The U.S Core Durable Goods and U.S New Home Sales reports will be published today; BOJ's Rate will be announced.
Gold sharply rose on Tuesday by 2.91% to $1,700.4; silver also sharply inclined by 4.45% to $33.05. These are the highest price levels these metals have reached during the month.
Euro Summit – Round Two Today
Today, the second of two EU summit will be held (the first one was held back on Sunday). This will be the 14th EU crisis meeting in the past 21 months and will include representatives from all 27 European Union countries.
There are still crucial issues left open including how to boost the EFSF, reducing Greece's debt burden and recapitalizing European commercial banks.
In regards to the Greek debt there are gaps between the EU leaders and private sectors banks: the former consider there should be at least a 50-60% hair cut on the Greek debt, while the latter offer only a haircut of 40% on the debt.
Merkel will address today the lower house in an attempt to pass the vote to increase the European rescue plan, which currently has 440 billion euros. In the mean time, German two year notes yields continue to fall, while Italy's 10 year notes yields continue to rise and is currently at 5.89% a 0.38 percent points monthly gain.
On Today's Agenda:
U.S Core Durable Goods: This report will present the changes in orders of durable goods in the U.S. in the manufacturing sector in September. During August 2011, manufactured durable goods fell by $0.2 billion to $201.8 billion;
U.S. New Home Sales:in the recent report (August 2011), the sales of new homes reached an annual rate of 295,000 – a drop of 2.3%; if this downward trend will continue, it may only further indicate a slowdown in the U.S real estate market;
U.S Dollar / Gold & Silver– October
S&P500 / Gold & Silver– October
The S&P500 also changed direction and declined on Tuesday by 2.00% to reach 1,229.05; during October the S&P500 added 8.63% to its value. During October the correlation between the U.S. stock market and gold was negative and weaker compared with previous months' correlations.
Gold and Silver Outlook:
Gold and silver continued their rally and sharply inclined on Tuesday – this was the third straight business day they rose; gold and silver continue their rally and are traded up. Today's EU summit might bring some ease to the financial community if the people involved there will reach an agreement; alas in the more likely scenario there won't be an agreement, and thus the uncertainty level will remain high. This may help with the ongoing rally of gold and silver. Today's U.S. reports might shed some light on the progress of the U.S. economy and if they will show a slowdown, it could also help push traders towards safe haven investments such as gold, silver and U.S. treasury bills.
For further reading:Weekly Outlook for October 24-28
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.
By: Lior Cohen, Energy Analyst for Trading NRG
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