Gold And Silver Outlook For October 29, 2012

Includes: GLD
by: Lior Cohen

Gold and silver edged down during last week. Will precious metals trade down during this week? Hurricane Sandy is expected to reach the East Coast including Washington, Philadelphia, New York and New Jersey by late Monday or early Tuesday. CME closed its trading in New York. The trading of forex will continue and gold will trade in Asia markets and OTC. In any case, this Hurricane is likely to curb the volatility of gold and silver prices throughout the week. As I have mentioned in the precious metals weekly outlook, the main reports of the week will revolve around non-farm payroll report, U.S manufacturing PMI, BOJ monetary policy statement, and U.S factory orders report. On today's agenda: BOJ Monetary Statement and U.S Personal Spending.

On Friday, Gold edged down by 0.06% to $1,711; Silver also slipped by 0.13% to $32.04. During last week, gold decreased by 0.7%; silver, by 0.2%. Furthermore, on Friday the SPDR Gold Shares (NYSEARCA:GLD) also fell by 0.61% and reached by October 26th 165.93.

As seen below, the chart shows the developments of normalized prices of precious metals during the past couple of weeks (normalized to 100 as of October 10th). During recent weeks, both gold and silver continued their downward trend.

On Today's Agenda

U.S Personal Spending: this monthly report will present the changes in income and outlays in the U.S as of September; in the previous report regarding August the personal income edged up by 0.1%; disposable personal income also increased by the same rate;

BOJ Monetary Statement: BOJ will announce its rate decision and monetary policy update later in the day. The current expectations are that Bank of Japan will expand its stimulus package. In such a case, this could adversely affect the yen. This decision, in turn, could also affect other currencies pairs and commodities prices.

Currencies / Bullion Market - October Update

The Euro/ USD edged up on Friday by 0.03% to 1.2939. During last week, the Euro/USD declined by 0.65%. Conversely, some currencies such as Aussie dollar appreciated during last week against the USD by 0.41%. The correlation between gold and Euro remains mid-strong and positive: during the past several weeks, the linear correlation between gold and EURO/USD reached 0.54 (daily percent changes); the linear correlation between the gold and AUD/USD was 0.43 (daily percent changes). Last week's mixed trend in forex markets, in which the Euro depreciated while the Aussie dollar appreciated (against the USD), may have contributed to low volatility in bullion prices. Nonetheless, if the Euro and other risk currencies will decrease against the USD, they are likely to drag down gold and silver.

Daily Outlook

The prices of precious metals edged down during last week, and may continue this downward trajectory during this week especially if the non-farm payroll report will be positive and present an increase in jobs of more than 110k. If Bank of Japan will announce of another expansion to its stimulus package it could affect not only the yen but also bullion rates. The shutdown of trading floor in New York due to the Hurricane is likely to keep the volatility in forex and commodities markets low during the week. Finally, if the Euro and other "risk currencies" will continue to fall against the USD, then they are likely to drag down precious metals.

For further reading see" Gold and Silver Outlook for November"

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.