Guest Commentary: Gold & Silver Prices Daily Outlook 10.31.2011
Gold and silver traders enjoyed from sharp gains to gold and silver prices during most of last week. The G20 summit, the FOMC meeting, the ECB rate decision and the U.S. labor report are the main events for the upcoming week that could influence bullion traders. The yen is sharply falling against the USD as Japan intervened in the forex market. Today, Euro Area Annual Inflation will be published, Canada's GDP report, China Manufacturing PMI and BOA Cash Rate Statement.
Gold slipped on Friday by 0.03% to $1,747.2; silver on the other hand slightly inclined by 0.50% to $35.29. The chart below presents the development of gold and silver during October (normalized gold and silver (September 30th 2011=100)).
The ratio between gold and silver slightly fell on Friday, October 28th to 49.51. During October, silver inclined by a slightly larger rate than gold as the ratio slipped by 8.2%.
Japan Weakens its Currency Again
Japan stepped into the forex exchange rate markets again and caused a sharp depreciation of he YEN against the USD and other currencies in order to protect the county's exporters. This news may also be among the reasons for the sharp appreciation of the USD against other currencies and consequently could also be a partial explanation for the sharp falls in major commodities.
On Today's Agenda:
Euro Area Inflation:the inflation in Euro Area grew to 3.0% in September; if the upcoming report will show a rise in the inflation rate, it may further lower the chances of an ECB interest rate reduction;
China Manufacturing PMI: this index will cover 800 companies in 20 industries in China; this index indicates the changes in China's manufacturing sectors growth rate;
Forex / Gold & Prices – October
The Euro/USD slightly slipped on Friday by 0.30% to reach 1.4147; other currencies also were traded slightly down against the USD. During last week, the sharp gains in the "risk currencies" coincided with the rally of gold and silver. If said currencies will continue to decline today, this shift may also pull down gold and silver.
Gold and Silver Outlook:
Gold and silver ended the week with light changes after they had rallied during the week. The current drop in bullion might be related to the "last day of the month speculation", as traders are closing positions on their gold and silver contracts. The current drop also coincides with the sharp falls in the major currencies against the USD such as YEN, EURO, AUD and CAD. Following the sharp gains during recent days in gold and silver, there might be a correction today as we are existing October.
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Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.
By: Lior Cohen, Energy Analyst for Trading NRG
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