Gold and silver continue their road to recovery from September’s downfalls as they have started the week with sharp rises. Today, the Reserve Bank of Australia announced the Cash Rate Decision will remain unchanged, and ECB President Trichet and Fed Chairman Bernanke will testify.
Gold sharply inclined on Monday by 2.18% to $1,657; silver also increased by 2.37% to $30.80. The ratio between gold and silver inclined on Friday, September 30th to 53.93. During September-October, silver declined by a much higher rate than gold as the ratio increased by 22.7%.
EURO/USD started October with a very sharp decrease of 1.58% to reach 1.3176 on Monday; the AUD and the CAD also depreciated against the USD also by 1.40% and 0.42%, respectively. If major currencies will continue to depreciate against the USD during the day, they may curb the recent rally of gold and silver.
On Today’s Agenda:
ECB President Trichet speaks: before the ECB announcement of its rate decision on Thursday, the European Central Bank President Trichet will give a speech that might hint into ECB’s rate decision. Trichet will probably also refer to the recent decisions of European policymakers to increase the EFSF funds;
Bernanke Testifies: following the announcement of FOMC plan to purchase LT securities and to sell ST securities to conclude by June 2012, the Federal Reserve Chairman is likely to address the stability and progress of US economy;
Gold and Silver Outlook:
Gold and silver continued yesterday their slow climb up after the sharp falls they had endured during September. The speeches of the Fed Chairman – Ben Bernanke and the European Central Bank President Jean-Claude Trichet might affect the trading today if they will report of any news or if Trichet will hint on the upcoming ECB rate decision. The ongoing decline in the US and European stock markets and the growing concerns of the development of the Greek debt into a Euro Area crisis continue to crowd out any other news items such the recent improvement in the U.S. PMI manufacturing; thus the current situation is likely to keep the market in high anxiety mode and consequently help gold and silver recover form their declines in September.
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Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.