By Lior Cohen, Energy Analyst for Trading NRG
Gold and silver slightly declined again on the first day of the week, but currently they are moderately rising. The recent news of the unexpected rise in the German confidence report maybe among the factors to further rally the Euro and thus also precious metals.
Today, the U.S. Housing Starts and building permits report will be published, the Canadian CPI and Bank of Japan announces its monetary policy and rate decision.
Gold rallied on Monday by 1.31% to $1,597.9; silver also rose by 1.36% to $29.27. The chart below shows the changes of gold and silver during the month (normalized gold and silver to November 30th2011). During December gold dropped by 8.7% and silver by 9.6%.
Despite the sharp decline in gold and silver throughout the month, their daily percent changes' standard deviations didn't increase compared with their standard deviations in previous months and are well below the high standard deviations recorded back in September when both precious metals prices plummeted precipitately.
Traders Bearish on Gold – Goldman Predicts Rally in Commodities
The sharp declines in commodities including gold was probably due to the sharp reduction in speculators' bets on commodities; according to Bloomberg, wagers on gold futures declined to an eight week low. That being said, Goldman Sachs is still predicting that 2012 won't be a recession year and commodities will maintain a 15% return in the upcoming year. This means that while gold may further decline in the days to come, it may rally in the long run.
On Today's Agenda
U.S. Housing Starts and Building Permits: the US Census Bureau will publish the U.S housing report; the housing starts was historically correlated with gold– as housing starts declined, gold tend to rise the following day (even when controlling to the USD effect); in the previous report, the adjusted annual rate of housing starts slightly rose by 0.3%, while adjusted annual rate of building permits inclined by 10.9% (M-o-M) (see here the recent review);
Forex / Gold & Silver– December Update
The Euro/USD moderately slipped on Monday by 0.36% to reach 1.2999. Other currencies such as the CAD also depreciated against the USD. If these currencies will change direction today and appreciate against the USD, then it may affect gold and silver to incline.
Gold and Silver Outlook:
Gold and silver didn't do much yesterday, but many anticipate that the precious metals will rally from the sharp declines of last week and curb some of the falls of December. The upcoming reports of the housing market in the U.S. may affect gold to rally if the reports won't show an improvement. In the meantime, if the Stocks and Forex markets will rally today, this may also positively affect precious metals to rise.
Courtesy:DailyFX
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