London Commodity Markets | Gold and Silver Prices Outlook for October 2012

Precious metals prices resumed their upward trend mainly during the first couple of weeks of the September in anticipation of many bullion traders for another intervention of the FOMC. This bet paid off because on September 13th the FOMC announced it will commence QE3 with no time limit.

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This news, however seems to have had, for now, a short term effect as the prices of precious metals remained nearly unchanged during the rest of the month. I have referred to this issue in a recent article and think that the prices of gold and silver will resume their rally in the months to follow. On the other hand, the recent developments in Europe, including the riots in Spain, Greece and Italy, may have curbed the recovery of not only bullion prices but also the Euro. The rally of Euro/USD, mainly during the first couple of weeks of September, coincided with the rise of precious metals prices. Will this upward trend continue during October? The main events of the month will continue to be around the FOMC, the EU debt crisis and the economic progress of China and India, the two leading importers of gold. The FOMC will convene during the final week of October. Bernanke will give a speech and the Fed will release the minutes of the recent FOMC meeting on the first week of October. The ECB will announce its interest rates and might commence a bond purchase program to help Spain in raising debt. In October, there will also be a Summit of the financial ministers of the G7.   

Let’s analyze the precious metals market for September and provide a short outlook for gold and silver for October 2012.

Gold and silver rates started off the month strong as both precious metals hiked during the first half of the month but then they changed pace and remained nearly unchanged during the second half of the month.  Most of the growth in prices came in anticipation of many traders that the FOMC will announce of September 13th of its launch of QE3, which turned out to be the case.

During the month, gold rose by 5.11%; silver, even more than gold, hiked by 9.97%. This was the best performing month for gold since January 2012.
Let’s divide September into two parts: the table below divides the month at September 13th; I divide the month in order to demonstrate the sharp shift in the pace of change of both gold and silver rates; during the first part of September, gold rose by 5% and silver price by 10.6%. During the second part of September, silver edged down by 0.2% and gold price rose by 0.1%.

During the first part of September, the U.S dollar also sharply depreciated against the Euro; the Euro/USD currency pair is usually strongly linked with gold and silver prices. During the first part of the month, the U.S dollar sharply depreciated against the Euro, Canadian dollar and Australian dollar; this shift might have also contributed to the rally of gold and silver prices during the first part of the month.

Source: www.tradingnrg.com

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