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Guest Commentary: Gold & Silver Daily Outlook 01.05.2012

Guest Commentary: Gold & Silver Daily Outlook 01.05.2012

2012-01-05 15:23:00
Lior Cohen, Energy Analyst for Trading NRG,
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Following the sharp gains recorded on the first business day of 2012 for both gold and silver, gold continued to rise while silver changed direction and moderately declined. The Euro also depreciated against the US dollar. France plans to sell today as much as €8 billion worth of debt. If this debt sale won't go well, it could also have an adverse effect of the Euro. Today, the Euro Area Industrial New Orders report will be published, ADP's estimate of U.S. non-farm employment, U.S. ISM Non-Manufacturing PMI and U.S. Unemployment Claims report.

Gold rose on Wednesday by 0.76% to $1,612.7; silver on the other hand declined by 1.61% to reach $29.10. In the chart below are the normalized gold and silver during recent weeks (normalized gold and silver to December 14th 2011). During January gold increased by 2.9% and silver by 4.2%.

Guest_Commentary_Gold_Silver_Daily_Outlook_01.05.2012_body_Gold_price_5.png, Guest Commentary: Gold & Silver Daily Outlook 01.05.2012

St. Deviation Gold and Silver

Despite the sharp changes in gold and silver throughout recent weeks, their daily percent changes' standard deviations didn't increase compared with their standard deviations in previous months and are well below the high standard deviations recorded back in September when gold and silver sharply declined.

Guest_Commentary_Gold_Silver_Daily_Outlook_01.05.2012_body_Standard_deviation__5.png, Guest Commentary: Gold & Silver Daily Outlook 01.05.2012

Euro Area Inflation Declined to 2.8% December

According to the recent Eurostat report the Euro Area inflation rate slightly slipped by 0.2 percent points to reach an annual inflation rate of 3% in December 2011.

This decline comes despite the recent cuts in the ECB's interest rates. The Euro is currently traded down. The Employment in the EU is also down by 0.1% during the third quarter of 2011. These reports may have been among the factors to adversely affect the Euro yesterday, as these reports suggest that the economic progress of the EU is slowing down, and thus this news may have curbed the recent rally of bullion prices.

On Today's Agenda

U.S. Unemployment Claims:initial claims rose by 15,000 to 381,000 claims for the week ending on December 24th; the number of insured unemployment inclined by 34k to 3.601 million during the week of December 17th;

U.S. ISM Non-Manufacturing PMI: This report will show the development of non-manufacturing sector during December 2011. During November this index slightly fell to 52%; this index might affect forex and commodities traders (see here last report).

Forex / Gold & Silver– January

The Euro/USD changed direction and sharp decreased by 0.82% to reach 1.2944; other currencies such as CAD also depreciated against the USD. If major currencies will continue to depreciate against the USD, it may also pressure down gold and silver.

Gold and Silver Outlook

Gold continued to trade up in January and even though silver declined yesterday, it is still well above its initial price level. I speculate that if the "risk currencies" including the AUD and Euro will start to depreciate against the US dollar, it may pull down gold and silver. Furthermore, if the upcoming U.S. reports will show an improvement it might help appreciating the US dollar and consequently pressuring down precious metals. Finally if the upcoming French debt sales won't go well, it could have a negative effect on the Euro, which in turn may also pressure down gold and silver.

For further reading:

Gold and Silver Prices Outlook for January 2012

Weekly Outlook for 2-6 January

Get the recent gold and silver outlook report for free! Just sign up to the Trading NRG newsletter.

By: Lior Cohen, Energy Analyst for Trading NRG

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