Gold and silver took a dive and along with other commodities, precious metals sharply declined yesterday; by doing so, the rally of gold during November was erased in a single day. This fall may have been stem from the recent news from Fitch rating that U.S. banks are exposed to European debt and may be negatively affected by it. The Philly Fed slow down probably didn't help as well. Today, the Canadian Core CPI will be published.

Gold sharply fell on Thursday by 3.05% to $1,720.2; silver also sharply declined by 6.87% to $31.50. In the chart below you can see the rise and sharp fall of gold and silver during the past few weeks. Due to yesterday's sharp falls, gold declined by 0.3% during November, and silver declined by 8.3%.

It seems that there is a chance that the European debt crisis might also affect the U.S. banks: according toBloomberg, Fitch Rating is reporting that U.S. banks may face "serious risk" as they are exposed to the several European countries' debt. These banks include, among other the JP Morgan, Citigroup and Goldman Sachs.

This news may have been among the factors that triggered yesterday's panic that induced sharp falls in the stocks and commodities markets, including the precious metals' market.

U.S Housing Starts Slightly Declined

Yesterday,the new residential construction statistics for October 2011 was published and showed a sharp increase in building permits but a moderate slip in housing starts.

Since historically there was a supposedlagged by one day negative correlation between housing starts and gold; i.e. as Housing starts annual rates decreases, gold tend to rise the following day, there is a chance that this news will help rally gold price today.

Philly Fed Slightly Fell

Yesterday, thePhilly Fed Manufacturing Index for November was published: it still showed growth in November but at a slower pace than in October as the Philly Fed index fell from +8.7 to +3.6. This news may have also helped pull the markets down during yesterday's trading.

S&P500 / Gold & Silver– November

The S&P500 declined on Thursday by 1.68% to 1,216.13. During November, the correlations among the major American stock market indexes such as the S&P500 and gold and silver were strong and positive; thus, if the stock market will continue to fall as it did in the past couple of days, it may also indicate that gold and silver are likely to decline.

Gold and Silver Outlook:

Gold and silver sharply fell yesterday along with other major commodities prices such as crude oil prices perhaps over the news from the U.S. Since major exchange rates such as the Euro/USD didn't change much yesterday, we are likely to rule out the recent tumble to be related to changes in the forex market. Yesterday's falls are likely to affect today's trading and we may see a moderate correction to the sharp declines in gold and silver.

For further reading:

Gold and Silver Prices Monthly Outlook for November 2011

By: Lior Cohen, Energy Analyst forTrading NRG