Gold and Silver Outlook for January 3
Submitted by Trading NRG as part of our contributors program.
The prices of gold and silver continued their upward trend on Tuesday. This rally coincided with the rise in other financial markets including other commodities such as crude oil and U.S stock markets. This rise was mostly attributed to the market reaction to the U.S policymakers reaching an agreement on the tax hikes and averting from the fiscal cliff. Despite this agreement, the U.S will still need to raise the debt ceiling in February and decide on the budget cuts needed. These issues will plausibly raise the uncertainty in the markets in the weeks to follow. Yesterday, it was reported the U.S manufacturing PMI rose to 50.7 in December. This news may have also contributed to the rise in commodities prices. On today’s agenda: Minutes of December’s FOMC Meeting, KOF Economic Barometer, Euro Area Monetary Development, ADP estimate of U.S. non-farm payroll, and U.S. Jobless Claims.
On Tuesday, the price of gold rose by 0.84% to $1,688.9; Silver price hiked by 2.77% to $31.01. During the week, gold rose by 0.73%; silver, by 3.01%.
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St. Deviation
The volatility of gold price declined in recent weeks while the volatility of silver rose. The shift in the volatility of these precious metals is represented by the changes in their respective standard deviations during the month compared to previous months: the standard deviations of gold and silver (daily percent changes) reached in December/January 0.79% and 1.99%, respectively.
On Today’s Agenda
Minutes of December’s FOMC Meeting: Following the December FOMC meeting, in which the Fed introduced its extension for QE3, the bullion market had only a very short term reaction to this news. The minutes of the recent FOMC meeting might add some additional insight behind this decision and the potential future steps of the FOMC especially in relation to the potential ramifications of the U.S fiscal cliff and the future FOMC meetings in 2013;
Euro Area Monetary Development: In the previous October report, the annual growth rate for M3 hiked to 3.9%; M1 also rose to 6.4%. Finally, the annual growth rate of loans to private sector also rose to -0.7%. This news suggests the EU economy isn’t growing; if this trend will continue it adversely affects the Euro/USD;
U.S. Jobless Claims Weekly Report: in the previous report the jobless claims declined again by 12k to reach 350k; this upcoming weekly report may affect the U.S dollar.
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