Gold and Silver Outlook for January 4

by Lior Cohen
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Submitted by Trading NRG as part of our contributors program.

The prices of precious metals changed direction and tumbled down on Thursday. The recent release of the minutes of the FOMC meeting may have contributed to the tumble in precious metals prices. Moreover, the expectations that the upcoming U.S employment report will be higher than expected (U.S employment grew by 155k in December) may also pull down the prices of gold and silver today. On today’s agenda: U.S. Non-Farm Payroll Report, Euro Area Flash Estimate of Annual Inflation, Canada’s Employment Report, U.S. ISM Non-Manufacturing PMI and U.S Factory Orders .

On Thursday, the price of gold changed direction and fell by 0.84% to $1,674.6; Silver price also tumbled down by 1.03% to $30.69. During the week, gold edged down by 0.01%; silver, by 1.71%.

Minutes of the FOMC

Yesterday, the FOMC published the minutes of the December meeting. In the minutes the FOMC members raised the question of how long will the current $85 billion per month purchase program continue. Some raised their concern regarding the eventual conclusion of this purchase program:

” … a few indicated the need for additional consideration of the implications of such purchases for the eventual normalization of the stance of monetary policy and the size and composition of the Federal Reserve’s balance sheet.”

If the Fed will decide to the end this purchase program soon, this could lead to the drop in gold and silver prices as it will end the expansion of the U.S money base and the potential devalue of the USD. The FOMC decided to hold another meeting January 29-30, 2013.

On Today’s Agenda

U.S. Non-Farm Payroll: the number of non-farm payroll employment rose by 155k in December; the U.S unemployment rate reached 7.8%; report may affect the prices of gold an silver (see here my last review on the U.S employment report). The table below shows the recent results of the non-farm payroll reports and the reaction of gold and silver prices on the day of the reports.

Canada’s Employment Report: In the recent employment update for November 2012, unemployment slipped to 7.2%; the employment rose by 59k during the month. The upcoming report might affect the Canadian dollar;

U.S. ISM Non-Manufacturing PMI: During November this index edged up to 54.7% – this means the non-manufacturing is growing and at a slightly faster rate than in the previous month; this index may affect forex and commodities trading;

U.S Factory Orders: in the previous report factory orders rose by 0.8%; this report will offer some insight to the progress of the U.S economy and could affect the direction of the U.S dollar;

For further reading:

Gold and Silver Outlook for January

Choosing Between Gold and Silver

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