Gold & Silver Daily Outlook 11.22.

2011
By Lior Cohen, Energy Analyst for Trading NRG,
22 November 2011 15:44 GMT

Gold and silver started the week with very sharp falls along with the rest of markets including other commodities and exchange rates. The U.S. budget reduction talks will likely to continue affecting bullion traders during the week. Today, the U.S. second estimate of the Q3 GDP report will be published, the minutes of the last FOMC meeting and the Canada's Core Retails Sales report. Gold sharply fell on Monday by 2.70% to $1,678.9 the lowest price level since October 24th; silver also sharply declined by 4.01% to $31.19.

Despite the sharp changes in direction for both gold and silver, during November, their standard deviations of their daily percent changes weren't different from gold and silver's standard deviations during October.

U.S. Budget Cuts the Debate Continues The talks over the U.S. budget cuts by the U.S. Super-committee continues to occupy the news and there are growing concerns of the ramifications of the Super-committee not reaching an agreement to cut at least $1.5 trillion from the Federal Budget over the next decade; currently if the Super-committee won't reach an agreement by Wednesday, November 23rd there will be a "trigger mechanism" that will automatically cut $1.2 trillion from the federal budget over the next decade. Many predict the Super-committee will fail. In the mean time, these talks over the U.S budget cuts may be among the factors to stir up the financial markets. On Today's Agenda Minutes of FOMC Meeting: Following the recent FOMC meeting, in which the FOMC revised down its economic outlook on the U.S economy, the minutes might provide insight regarding the next steps of the FOMC and might answer will there be an additional stimulus plan (see here FOMC meeting); U.S. GDP Q3 (second estimate): This will be the second estimate of the third quarter 2011 real GDP of U.S. In the first estimate of the 3Q2011 the GDP growth rate was 2.5%, compared with 1.3% increase at 2Q2011. If this report will present substantial changes, it may affect traders (for the final estimate of 3Q GDP). Forex / Gold & Silver November The Euro/USD exchange rate changed direction on Monday and slightly fell by 0.26% to reach 1.349. Other currencies also sharply depreciated against the US dollar. If the Australian dollar and Canadian dollar will continue to depreciate against the USD as they did in recent weeks, they may also pressure gold and silver to decline. Gold and Silver Outlook: Gold and silver sharply declined on the first day of the week; some speculate this was stem by the debate over the U.S budget cuts. There are also mixed signals from the position of hedge funds and in Bloomberg it was reported yesterday that Hedge funds cut their bullish bets on commodities, and today Bloomberg reports Funds raise their exposure to commodities including gold. This only shows that the market has yet to determine the direction of gold and silver. If major currencies and American stock markets will rebound from yesterday's falls, it may also affect in the same direction gold and silver.