Gold and Silver Monthly Outlook for November 2011

Gold and silver made a comeback from the sharp falls they had recorded in September and rose during October. What were the main factors that contributed to the comeback of gold and silver in October? The uncertainty in the financial markets remained high revolving the progress of the U.S. Economy and the Greek debt crisis. This uncertainty may have been among the factors to push gold and silver prices up. So what is next for gold and silver in November 2011? Let’s examine the metals market for October and provide an outlook for gold and silver for November 2011.

Gold and Silver October 2011

Gold and silver started the month with moderate falls that shifted towards the second part of the month to very sharp rises.

Gold ended October with a 6.3% increase and silver rose by 14.2%. 

The table below divides the month into two parts with the breaking point at October 20th; during the first part of October, gold slipped by 0.6%, while silver slightly inclined by 0.7%. But during the second part of October, silver sharply inclined by 13.5%, and gold increased by 7.0%.

For the complete on the gold and silver prices report see in Trading NRG

 During the first part of October, the USD sharply appreciated against the Euro, AUD and CAD, in which the two latter currencies are usually strongly correlated with gold and silver; during the second part of October, the USD depreciated against the Euro and Yen and only moderately appreciated against the AUD and CAD; this shift is consistent with the sharp changes in gold and silver movement.

Here are several factors that may have affected gold and silver to rise during October:

  1. The Greek debt crisis is still a real and near threat on the stability of the European economy; this crisis didn’t help ease the concerns of many investors;
  2. The weakening of USD compared with the riskier currencies including Euro, and Yen during October especially during the second half of the month;
  3. The sharp rises in the U.S. stock market indexes during the month(see below);
  4. The growth in the U.S. federal deficit during September 2011 by $64 billion raised the level of uncertainty in the market.
  5. Shifts in the sentiment of traders as traditional “safe haven” investments were traded down. 

Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.

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