Guest Commentary: Gold & Silver Daily Outlook 04.10.2012
Gold and silver didn’t move in sync yesterday as gold price rose while silver price declined. The U.S. non-farm payroll report which came out on Friday may have had a different effect on bullion prices. But the market’s reaction was mostly in the U.S stock markets that sharply declined. The Indian Jewelers strike is over and physical demand for gold is expected to grow in the weeks to come. Today, Bank of Japan will report on its monetary policy and rate decision.
Gold increased on Monday by 0.85% to $1,643; silver on the other hand declined by 0.65% to $31.52.
The chart below presents the shifts in gold and silver during the month so far (prices are normalized to March 30th).
The ratio between gold and silver edged up to 52.15. During the month the ratio rose by 1.32% as gold has slightly outperformed silver.
Indian Jewelers Strike is over – Demand for Gold may rise
The major gold news comes from India: the Indian jewelers ended their three week strike because of the decision of Indian government to raise the import tax on gold from 2% to 4%. The Strike ended when the Finance Minster stated he will consider a rollback of the tax. It’s still unclear if the strike won’t resume again and what was the effect of the strike on the demand for gold.
The strike ends at a key time as India’s gift giving Akshaya Tritiya festival will be on April 24. India is the leading country in importing gold. This news may have rally gold price during today’s trading.
On Today's Agenda
BOJ – Rate Decision and Monetary Policy: Bank of Japan will decide on its interest rate and monetary policy. Up to now, BOJ left the interest rate unchanged at 0 to 0.1 percent. If the BOJ will introduce monetary stimulus plans, it could affect the Yen and commodities prices because Japan is among the leading countries in importing commodities;
Gold and silver moved in different direction yesterday but their linear correlation is still strong and robust. The effect of the U.S labor report seems to have dominated yesterday’s market reaction. Today the BOJ rate decision may affect the Yen, which in turn might have a moderate effect on other currencies and consequently bullion. The end of the strike in India may also have a positive effect on bullion prices during today’s trading. On the other hand if the Euro will decline as the market will react to the growing concerns over the Euro Zone’s stability and debt crisis this could have a negative effect on bullion.
This gold and silver forecast was first presents in Trading NRG
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By: Lior Cohen, M.A. in Economics, Commodities Analyst and Blogger at Trading NRG
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