The prices of gold and silver changed direction again and tumbled down along with other commodities such as oil and stock indexes. Further, this fall coincided with the deprecation of the Euro and other “risk currencies” against the USD. Today the FOMC meeting will conclude. The FOMC will issue a statement later this day that could affect precious metals prices. U.S treasuries yields are still increasing and this trend could serve as an indicator for a rise in “risk taking sentiment”. If such a sentiment will continue it could adversely affect not only the demand for U.S treasuries but also bullion. On today’s agenda: FOMC Statement, U.S. New Home Sales, Flash Euro Area Manufacturing PMI, German Business Climate Survey, U.S. Flash Manufacturing PMI, Bank of Canada’s Monetary Policy and Press Conference, ECB President Speaks, and German 10 Year Bond Auction.
On Tuesday, Gold declined by 0.98% to $1,709; Silver also decreased by 1.42% to $31.79. During the month, gold decreased by 3.64%; silver, by 8.05%.
The ratio between the two precious metals rose on Tuesday to 53.77. During the month, the ratio increased by 4.8% as gold slightly out-performed silver.
FOMC Statement – October Meeting
Today will conclude the penultimate FOMC meeting for 2012 (the next meeting will be during December 11-12). Because of the recent FOMC decision to implement quantitative easing 3 and to extend its pledge of low rates to mid-2015, there aren’t high expectations that the Fed will introduce additional expanding monetary steps in this meeting. In the past when the FOMC didn’t change its policy the prices of gold and silver declined mainly on the next day.
On Today’s Agenda
U.S. New Home Sales: in the previous report, the sales of new homes declined to an annual rate of 373,000 – a 0.3% decline (month over month); if the number of home sales will change direction and rise, it may indicate a sign of some recovery in the U.S real estate market which may also affect the strength of the USD;
German Business Climate Survey: In the previous report for September 2012, the business climate index declined from 102.3 in August to 101.4 in September; if this trend will continue, it might adversely affect the Euro;
U.S. Flash Manufacturing PMI: During September 2012 the index rose to 51.5%, which means the manufacturing is expanding; this index may affect forex, crude oil and natural gas markets;
Bank of Canada’s Monetary Policy and Press Conference: The Bank of Canada will come out with its monetary policy report and also hold up a press conference; if there will be big headlines in this press conference it could affect the Canadian dollar;
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