Guest Commentary: Gold & Silver Daily Outlook 01.25.2012
Gold and silver changed direction and moderately slipped during yesterday's trading along with other commodities. Today, the FOMC statement and rate decision will be announced, U.S. pending home sales report will be published along with the German business climate report, Great Britain's GDP growth in the fourth quarter and ECB's President Draghi will give a speech. Many look forward for today's FOMC statement that may affect commodities markets if it will have any interesting headlines.
Gold declined on Tuesday by 0.82% and reached $1,664.5; silver also slipped 0.91% and reached $31.98. During January, gold rallied by 6.2% and silver by 14.54%.
Despite the sharp rally of gold and silver during the month so far, their daily percent changes' standard deviations are falling compared with their standard deviations in previous months; this means that the volatility of the bullion prices are declining.
On Today's Agenda
FOMC Statement and Rate Decision: The FOMC will convene to decide on the interest rate and present an economic outlook for the U.S. economy; currently there is little evidence that the FOMC will decide to change its rate or implement another QE plan especially after the US employment is on the rise; the FOMC's decision may affect gold if the FOMC will come up with a big announcement (e.g. another stimulus plan), which currently doesn’t seem to be the case;
U.S. Pending Home Sales: This report present the changes in pending home sales in the U.S. for December 2011; in the November report the pending home sales index increased by 7.3%. These data are another indicator for the progress of the American real estate market;
Gold and Silver Outlook
Gold and silver traded down yesterday, but their general direction seems to continue be upwards. The upcoming news regarding Europe including German business climate, GB GDP and ECB President's speech may affect precious metals: if these reports and speech will be positive and help trade up the Euro, this, in turn, may also positively affect gold and silver. The FOMC's meeting will end today and I speculate there won't be big headlines from it, but in case there will be it could affect bullion traders.
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By: Lior Cohen, M.A. in Economics, Commodities Analyst and Blogger at Trading NRG
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