Guest Commentary: Gold & Silver Daily Outlook 01.06.2012
Gold and silver continued their upward trend and moderately inclined yesterday despite the drop in commodities. The Euro sharply depreciated against the USD. Today, the American non-farm employment report will be out and some expect it will show a sharp gain in employment; the Canadian employment report will also be released today.
Gold inclined on Thursday by 0.46% to $1,620.1; silver also rose by 0.68% to reach $29.30. In the chart below are the normalized gold and silver during recent weeks (normalized gold and silver to December 23rd 2011). During January gold increased by 3.4% and silver price by 4.9%.
U.S. Non- Manufacturing Index Slightly Rose to 52.6%
The U.S. non-manufacturing PMI, an index that estimates the economic activity in the U.S. non-manufacturing sector, grew to 52.6% in December i.e. a 0.6 percent points gain. This may have been among the factors to help pull down the risk currencies against the U.S. dollar.
U.S. Initial Claims Fell Last Week
According to the recent U.S. jobless claims weekly report there was a decrease in initial claims of 15,000 for the week ending on December 31st to reach 372,000 claims (seasonally adjusted data); the number of insured unemployment reached 3.595 million, a decrease of 22,000 compared with the previous week’s figure. This news may have affected yesterday's trading and may have helped with the appreciation of the USD.
On Today's Agenda
U.S. Non-farm Employment Report: in the December report regarding November, the labor market continues to rally as the number of non-farm payroll employment rose by 120k; the U.S unemployment rate slipped to 8.6%; the last report showed improvement from the previous months, and may have traded down gold and silver during the first days of December (see chart below for further details; for the complete analysis see in the January 2012 gold and silver monthly report). This report could affect not only the USD, but also gold and silver (see my last review on the U.S labor report).
Canada Employment Report: In the last employment report for November 2011, unemployment rose by 0.1 percent points to 7.4%; the employment declined by 19k (see here previous report);
Forex / Gold & Silver– January
The Euro/USD sharp decreased again for the second consecutive day, yesterday by 1.21% to reach 1.2788; other forex exchange rates such as the Australian dollar also sharply depreciated against the USD. If major currencies will continue to depreciate against the USD, it may also affect gold and silver to change direction and decline.
Gold and Silver Outlook
Gold and silver continued to trade up yesterday, but might change direction and decline today if the U.S. employment report will show a substantial increase in the U.S. employment; furthermore, I speculate that if the "risk currencies" including the AUD and Euro will continue to depreciate against the USD, it will eventually catch up with gold and silver and pull them down. On the other hand, if the U.S. stock markets will continue to trade up, it may help keep gold and silver up.
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By: Lior Cohen, Energy Analyst for Trading NRG
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