Guest Commentary: Gold & Silver Daily Outlook 01.11.2012
Gold and silver continue to rise along with the rest of the other commodities including oil. The Australian dollar appreciated against the US dollar. This rally in the Forex market may have also helped push up gold and silver. There are reports of rising imports of gold from Hong Kong to China; this news may also partially explain the recent rally in gold. On the other hand, Fitch's concerns of the European debt crisis spreading may be among the factors currently pulling down the Euro and consensually curbing gold's rally. Today, China's CPI will be published and Great Britain's trade balance report.
Gold sharply inclined on Tuesday by 1.46% to $1,631.5; silver also sharply rose by 3.59% to reach $29.82. In the chart below are the normalized gold and silver (gold and silver are normalized to December 30th). During January, gold rose by 4.1% and silver by 6.8%.
The ratio between gold and silver declined on Tuesday, January 10th and reached 54.72. During January the ratio decreased by 2.5% as silver has slightly outperformed gold.
On Today's Agenda
Great Britain Trade Balance: In the previous report regarding October 2011, UK's seasonally adjusted trade balance deficit of goods and services contracted from £4.3 billion in September to £1.6 billion in October; if this trade balance deficit will continue to shrink it could affect GBP;
Forex / Gold & Silver– January
The Euro/USD slightly rose on Tuesday by 0.10% to reach 1.2778; furthermore, in yesterday's trading the AUD strongly appreciated against the USD. The chart below shows the development of the linear correlation of gold and silver with AUD/USD daily percent changes. It shows that in the past few months the relation between AUD and bullion prices has tighten; thus if the AUD and will change direction and depreciate against the USD, it may also curb the recent rally of gold and silver. Currently, the Euro and AUD are traded down.
Gold and Silver Outlook
Gold and silver continued their upward trend that commenced a couple of weeks ago and as long as the AUD will appreciate against the USD, it is likely that precious metals will continue with their upward trend otherwise the depreciation of these currencies will curb the bullion rally. The recent news from China may be among the factors keeping the current rally in gold price alive. Furthermore, the ongoing rally in the stock market on the one hand and the decline in the demand for U.S. LT securities on the other may also indicate that the bullion traders are renewing their risk appetite which could benefit the precious metals.
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By: Lior Cohen, Energy Analyst for Trading NRG
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