Gold and silver prices started off the week falling, much like the rest of the market including the Euro, oil prices, and stock markets. The disappointing manufacturing PMI of China and Euro-zone that contracted by 49.1 and 46, respectively may have been among the factors pulling down not only the Euro but also bullion prices. Will this downward trend continue today? Currently gold and silver are slightly increasing. On today’s agenda: a G7 Summit, Great Britain net borrowing, Canada’s retails sales and U.S consumer confidence and new home sales reports.
Here is a short analysis and projection of gold and silver prices for Tuesday, April 24th:
Gold and Silver– April Update
Gold price declined on Monday by 0.62% to $1,632.6; silver even more than gold sharply decreased by 3.53% to $30.6. During April, gold decreased by 2.35% and silver by 5.8%. This means the little rally that silver had last week was completely erased yesterday.
The chart below presents the downward trend of both metals during recent weeks (gold and silver are normalized to 100 as of March 30th).
The ratio between gold and silver increased to 53.35 – the highest level in over three months. During April the ratio rose by 3.66% as gold has outperformed silver during the month mainly yesterday. In the chart below are the developments in this ratio during April (up to date).
As indicated in the chart below the linear correlation between gold and silver was near the 0.9 mark, i.e. strong and positive relation; this means despite the different daily percent changes of gold and silver in recent days, their relation remains strong and robust.
Canada Retails Sales: This report may affect the path of USD/CAD exchange rate, which tends to be correlated with gold and silver prices (see here the full report);
U.S Consumer Confidence: last month, the consumer confidence index decreased in March (M-o-M). The current expectations are that the April index may change direction and edge up; this report might affect commodities prices;
U.S. New Home Sales: in the last report (February 2012), the sales of new homes decreased by 1.6%; if the number of home sales will continue to decline, it may further indicate a slowdown in the U.S real estate market which may also affect the US dollar.
Forex / Gold & Silver Market – April
The Euro/U.S Dollar declined on Monday by 0.48% to 1.3156. During April Euro/U.S Dollar decreased by 1.41%; furthermore, the “risk currencies” which tend to be linked with metals prices including the Aussie dollar also depreciated against the U.S. dollar by 0.59%. The recent manufacturing PMI reports on Euro zone and China may have had something to do with the depreciation. If the US dollar will continue to appreciate against these exchange rates, this may signal gold and silver will continue to tumble.
Current Gold and Silver Prices as of April 24th
Gold (May 2012 delivery) is traded at $1,636.1 per t oz. a $3.5 or 0.21% increase as of 08:04*.
Silver (May 2012 delivery) is at $30.815 per t oz – a $0.216 or 0.71% increase as of 08:04*.
Daily Outlook and Analysis for April 24th
Gold and silver prices started off the week falling and this trend may continue during most of the week mainly if tomorrow’s FOMC statement will reveal there is no additional stimulus plans in the horizon. Following yesterday’s tumble in many financial markets there might be a moderate correction in today’s trading (all things being equal) that bullion prices might also benefit. Finally, if the U.S reports including home sales and consumer confidence will not be positive this may weaken the U.S dollar and consequently help rally gold and silver prices.
Here is a reminder of the top events and reports that are planned for today and tomorrow (all times GMT):
09:30 – Great Britain Net borrowing
All Day – G7 Summit
13:30 –Retails Sales Canada (February 2012)
15:00 – U.S Consumer Confidence
15:00 – U.S. New Home Sales
08:00 – ECB President Draghi Speaks
09:30 – Great Britain GDP Q1 2012
13:30 – U.S Core Durable Goods
15:30 – U.S Crude Oil Stockpiles Report
17:30 – FOMC Meeting (Statement)
19:00 – FOMC Economic Projection
19:15 – FOMC Press Conference – Bernanke Speaks
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