Guest Commentary: Gold & Silver Daily Outlook 12.16.2011
Gold continued to decline yesterday after the sharp falls recorded a day earlier; silver on the other hand changed direction and slightly rallied. The U.S. Producer Price Index slightly inclined according to yesterday's PPI report, and the Philly Fed Manufacturing Index also rose in December. Today, the ECB President will give a speech, and the U.S. CPI report.
Gold slipped on Thursday by 0.61% to $1,577.2 – the lowest price level since July 12th; silver on the other hand rose by 1.17% to $29.27. The chart below shows the changes of gold and silver during the month. During December gold decreased by 9.9% and silver by 10.8%.
Analysts Still Predict Gains for Gold
Despite the sharp fall recorded during December mainly during this week in gold price, many analysts still consider there will be a rally in gold price during next week according to a recent Bloomberg survey.
There are also signs that the fundamental still show gold to remain high according to the report. In the mean time, hedge funds continue to remain bullish on commodities.
On Today's Agenda
U.S CPI: This monthly report will show the main changes in the consumer price index during November. According to the U.S Bureau of Labor statistics for October, the CPI decreased by 0.1% but inclined over the last 12 months by 2.1%. The main reasons for this decrease are related to the sharp falls in energy prices;
Forex / Gold & Silver– December Update
The Euro/USD changed direction on Thursday by 0.26% to reach 1.3016. Other exchange rates also appreciated against the US dollar. The appreciation of these currencies may also affect gold and silver to rise.
American Stock / Gold & Silver– Update
The S&P500 slightly rose yesterday along with the rest of the American stock markets; on Thursday the S&P500 rose by 0.32% to 1,215.75. The S&P500 continues to be strongly and positively correlated to gold and silver (during December the linear correlation was 0.597 and 0.682, respectively), so that if the stock market will continue to rally today as well, it may also indicate that gold and silver are likely to follow and rise. The chart below shows the development of precious metals and S&P500 during December (prices normalized to Nov 30th)
Gold and Silver Outlook:
Gold and silver may recover today from the sharp falls recorded during the week as a correction. The positive report of the Philly Fed may keep pushing up the major commodities prices including gold and silver. If the market sentiment will continue to be positive today as it was yesterday in the Stocks and Forex markets, then it may also help rally precious metals as well.
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About the Author: Lior Cohen, M.A in Economics, 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.