Gold & Silver - Daily Outlook November 10

Gold and silver changed direction and the concerns of the European debt crisis including the news from Italy and Greece (see below) may have caused the sharp fall for the Euro that may have also affected gold and silver to decline. Today, there are many items on the agenda including: the U.S. Federal Budget Balance report, the American and Canadian trade balance reports, the U.S. Unemployment Claims, the GB rate decision and Ben Bernanke will speak.

Gold moderately declined on Wednesday by 0.42% to $1,791.6; silver also declined by 2.25% to $34.36. During November, gold increased by 3.8% while silver remained virtually unchanged.

The European Debt Update November 10th

Therecent news from Italy is that Silvio Berlusconi will step down from his position as Italy's Prime Minster by Saturday. The debt crisis in Italy was probably the prime reason for the sharp falls yesterday in the European stock markets and the sharp depreciation of the Euro.

The Italian government bonds yields sharply inclined to 7.45 – a weekly increase of 1.43 percent points. From the beginning of the month the Italian government bonds yields inclined by 1.93 percent points.

The Greek government bonds yields continue to remain high at 27.73% – a weekly increase of 4.49 percent points.

On Today's Agenda:

U.S. Unemployment Claims:initial claims declined by 9,000 to 397,000 claims for the week ending on October 29th; the upcoming report may affect forex and commodities traders;

U.S. Federal Budget Balance: this report indicates the government debt growth and thus may affect the USD. In the October report the deficit rose by $64.5 billion (See here a summary of the recent report).

Currencies / Gold & Silver– November

The EUR/USD sharply fell on Wednesday by 2.11% to reach 1.3542. The news from Italy and Greece seems to continue raising the uncertainty levels and thus may have affected the Euro and could consequently also pressure gold and silver to trade down as the USD will appreciate.

U.S. Treasuries / Gold & Silver Prices – November

TheU.S. 10-year Treasury yield sharply declined on Wednesday by 0.10 percent points to 2.0%; during November there were strong positive correlations among the U.S. 10 year notes yields and gold and silver. If the LT U.S. treasury yields will keep on declining, this may indicate a shift in the financial market sentiment that could pressure gold and silver to decline.

Gold and Silver Outlook:

Gold and silver moderately declined yesterday and thus halted the recent rally gold experienced in recent days. The effect of the changes in the forex markets mainly in Euro, AUD and CAD against the USD due to the speculation revolving the news from Greece and Italy may have also affected gold and silver to decline (via the exchange rate effect). If the reports that will be published today regarding the U.S economy will be positive, they may curb some of the falls in the Euro and in turn may curb the decline in gold and silver throughout the day. I speculate that gold and silver are likely to continue zigzagging throughout the week.

For further reading:

Gold and Silver Prices Weekly Outlook for November 7th – 11th

Gold and Silver Prices Monthly Outlook for November 2011

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

By: Lior Cohen, Energy Analyst forTrading NRG