Gold and silver prices slightly fell on Friday after they have risen very precipitately during most of the week. Another G20 meeting was held yesterday. The leading economies tried to reach an agreement on a second rescue package worth $2 trillion to ward off the perils of the EU debt crisis. This deal however is far from closed. Currently gold price is declining. Today, the Euro Area Monetary Development report will be published and the U.S. Pending Home Sales.
Gold and Silver– February Update
Gold price decreased on Friday by 0.55% to $1,776.4; silver also declined by 0.61% to $35.42. During February, gold rose by 2.07% and silver by 6.49%.
The chart below shows the developments of gold and silver during the month (prices are normalized to January 31st).
The ratio between gold and silver remained virtually unchanged on Friday, February 24th and reached 50.15. During February the ratio declined by 4.15% as silver has slightly outperformed gold. In the chart below are the changes in this ratio during February.
On Today’s Agenda
Euro Area Monetary Development: This report will present the monthly changes in the M3, M1 and loans to private sector during January. In December, for M3 sharply declined to 1.6%, and private sector loans fell to 1.0%. If the M1 M3 and private sector loans will continue to decline in January it could serve as another indicator for the slowdown in the Euro Area economic progress, and it may adversely affect the Euro and consequently also commodities prices (see here the last report);
U.S. Pending Home Sales: in recent December the pending home sales index declined by 3.5%. If there will a sharp shift this report might affect USD.
Forex / Gold & Silver Market – February
The Euro/U.S Dollar rose on Friday by 0.57% to 1.3449. During February Euro/U.S Dollar increased by 2.8%; on the other hand, the Aussie dollar and Canadian dollar depreciated against the U.S. dollar by 0.22% and 0.17%, respectively. The correlations among Aussie dollar, CAD, Euro and precious metals prices have declined in recent weeks but are still positive (the linear correlation between the Aussie dollar/USD and gold price is 0.21). Therefore, if the Euro and Aussie dollar will trade down; it could indicate that gold and silver prices will follow and also decline. Currently, the Euro/USD is slightly decreasing.
Current Gold and Silver Prices February 27th
Gold (March 2012 delivery) is traded at $1,775.4 per t oz. a $1 or 0.06% decrease as of 06:47*.
Silver (March 2012 delivery) is at $35.535 per t oz – a $0.115 or 0.32% increase as of 06:47*.
(* GMT)
Gold and Silver Daily Outlook
Gold and silver prices declined on Friday and they have started off the week slightly falling. Since the rest of the market is also traded down including Euro, AUD, oil prices and stock markets, this could mean this market movement won’t spare precious metals and result in gold and silver prices declining. The upcoming U.S. pending home sales report and EU Monetary Development might affect Euro/USD exchange rate, which in turn, may affect the direction of precious metals prices.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Today
09:00 – Euro Area Monetary Development
15:00 – U.S. Pending Home Sales
Tomorrow
13:30 – U.S Department of Commerce – Core Durable Goods
15:00 – U.S Consumer Confidence
For further reading: