Gold and silver didn’t do much on the last day of September, with gold slightly rising and silver declining. Currently, gold and silver are traded sharply up. Today, the U.S. ISM Manufacturing PMI report will be published, and Australian Trade Balance report.
Gold inclined on Friday by 0.31% to reach $1,622; silver, on the other hand, decreased by 1.44% to $30.08. During September, gold decreased by 11.4% and silver plummeted by 28.0%.
On Today’s Agenda:
U.S. ISM Manufacturing PMI: This report will show the monthly change in manufacturing sector on a national level during September 2011. In August the index slightly fell to 50.6%; this index might affect traders of major commodities (see here my review of last report);
Australian Trade Balance: The upcoming report will refer to August 2011. In the July 2011 report, there was a rise in export of non-monetary gold by $596 million (82%); if the gold exports will show an increase in August, it might suggest an increase in demand for non-monetary gold that could explain the changes in gold (see here last report);
USD/ Gold & Silver–September/ October
The EURO/USD exchange rate closed the month with a very sharp drop of 1.54% to reach 1.3388 on Friday. These sharp changes in the EURO/USD may have been stem from the recent hike in Euro Area inflation rate for September (sere below). If major currencies will continue to devalue against the USD during the day, they may also pressure gold and silver to trade down.
Gold and Silver Outlook:
Gold closed the month of September moderately rising, while silver declined. After one of the worst monthly performances for both gold and silver, things are likely to change in October. The relation between the two bullion prices is still robust so that if gold will start to pick up throughout the day over the weak performance of the US stock market, and the drop in LT securities yields, silver will probably follow and incline as well. The recent hike in Euro Area inflation for September will likely to keep the ECB interest rate at 1.5% or perhaps at 1.25%, if Trichet will lower the ECB rate by 0.25 per cent points. If there will be an announcement of a rate drops on Thursday, it could affect not only the Euro/USD, but also pressure precious metals down. Today’s US PMI manufacturing report might affect precious metals, and if the ISM index will decline, it could contribute to the rally of gold and silver during the first trading day of October.
For further reading:
Li or Cohen, M.A. commodities analyst and blogger at Trading NRG.