Gold and silver ended the week falling as major currencies such as Euro and Australian dollar depreciated against the US dollar. The debate over the budget cuts in the U.S. will continue to occupy the news and may even affect the trading. Today the Euro Area Monetary Development report will be published and the U.S New Home Sales.

Gold slightly declined on Friday by 0.61% to $1,688.5; silver also sharply fell by 2.73% to $31.09. In the chart below, gold and silver had downward trend during the past couple of weeks (normalized gold and silver to November 10th 2011).

The European Debt Crisis Update November 28th

Following the low sales of German bonds and the growing concerns for the stability of France, the leader of Germany and France will meet during the week and try to reach an agreement on budget cuts among European countries that will come into effect starting 2012. This is another attempt to stabilize the Euro Area. The flight of many traders from the Euro currency may also adversely affect gold and silver as the USD gets stronger.

U.S. Budget Cuts – the Debate Progress

Following the failure ofU.S. Super-committee to reach an agreement on the Federal budget cuts, the next step is the "trigger mechanism" that will automatically cut $1.2 trillion from the U.S. budget over the next decade from across all the different sections in the budget including defense. The Republicans will try to block this "trigger mechanism", but President Obama already stated he will veto any attempt to undo this "trigger mechanism" and will make sure that the $1.2 trillion will be reduced from the budget. This news will probably continue stirring up the financial markets and may influence stocks and commodities traders.

On Today's Agenda

U.S. New Home Sales:in the previous report (September 2011), the sales of new homes fell by 5.7%; if this downward trend will continue, it may further indicate a slowdown in the U.S real estate market and may also affect gold and silver;

S&P500 / Gold & Silver– November

The S&P500 slightly fell on Friday by 0.27% to 1,158.67. The S&P500 and gold and silver have had a strong and positive relation during the month so far, so that if the stock market will continue to fall, it may also indicate that gold and silver are likely to decrease.

Gold and Silver Outlook:

Despite the downward trend of gold and silver in the past couple of weeks, they didn't do much during last week. If the USD will continue to strengthen against major currencies, and the U.S stock markets will tend to fall, gold and silver are likely to follow and decline. The U.S. budget cuts talks may also affect gold and silver as they did during last week.

For further reading:

Weekly Outlook for 28 November – 2 December

Gold and Silver Prices Weekly Outlook for Nov 25- Dec 2

By: Lior Cohen, Energy Analyst forTrading NRG