Alex Bobrov
Yesterday the 30- and 10-year US bond yields changed (+1% and -0.19%, correspondingly). Investors preferred to invest in less risky assets with broader investment horizon. Short-term investors bought stocks, commodities and euro.
At the end of the trading day the common currency lost only - 0.014% against the US Dollar, with the trading volume being above the average.
On Oct 18 the open interest declined by 0.74% for gold futures and gained 0.67% for gold options. As for the silver, its open interest gained +1.86% and +0.44% for futures and options correspondingly.
СМЕ Group’s gold and silver reserves increased by 1.16% and 0.37% correspondingly. ETF reserves stayed the same.
Closing Price, Change in %:
GOLD 100 OZ FUTR (USD/t oz.) 1654.6, -0.94%
SILVER FUTURE (USD/t oz.) 32.0, +0.72%
This week silver keeps outperforming gold in terms of profitability. Yesterday gold showed negative correlation with US stocks. This is what “safe haven” hunters keep looking for. If gold keeps showing the mentioned negative correlation, it may regain confidence and previous trading volumes. Probably that is why yesterday the CFTC voted for imposing trading-volume restrictions on 28 commodity futures and swaps, including gold, silver, platinum and palladium.
However, the market of gold is still driven by physical demand (jewelers) and short-term speculations. Moreover, numerous developing economies keep expanding their gold reserves.
European and US stock markets closed the day with the opposite results. Crude oil futures gained 2.2%.
European investors are getting more risk-averse after the information that the eurozone needs 2 trillion euro in order to stabilize the situation. They are concerned about France’s sovereign rating and the stability of European banks.
Oct 18th 2011
EURO STOXX 50 Price EUR 2,306.81 -0.39%
FTSE 100 Index 5,410.35 -0.48%
Deutsche Borse AG German Stock Index DAX 5,877.41 +0.31%
DOW JONES INDUS. AVG 1,577.00 +1.58%
S&P 500 INDEX 1,225.38 +2.04
NASDAQ Composite Index 2,657.43 +1.63%
This morning Asian markets gained 0.5% - 1.5%. The markets are waiting for the US inflation data. However, the eurozone remains the major source of concern. Rating agencies report that France’s rating is under threat, probably preparing the markets for a rating cut.
According to the Department of Commodity Trading, , fundamental factors are still affecting gold and silver prices. However, gold is expected to prove that it is a safe haven asset by showing negative correlation with stocks and commodities. Gold well may decline in value. Gold prices may try to overcome the levels 1654 and 1664. Silver may try to consolidate above$ 32.
Alex Bobrov
