The debt ceiling was raised by $2.1 trillion and the financial market has gained back some of its stability. Gold and silver prices started off the month with small changes. Today, the U.S. ISM Manufacturing PMI report will be published.
Let’s examine the precious metals market for today, August 1st:
Gold and silver prices –July & August
Gold price finished July with a 0.93% increase as it reached $1,631. Silver price also inclined by 0.78% to $40.11.
During July, gold price increased by 8.5%, and silver price inclined by 15.1%.
The chart below shows the normalized gold and silver prices (June 30th 2011=100).
The chart shows the steep upward trend of gold and silver prices mainly during the first couple of weeks of July.
The gold to silver ratio: the ratio between gold and silver prices moderately inclined on July 29th by 0.1% to 40.67. During July silver price has outperformed gold price as the ratio fell by 5.7%.
US debt ceiling – the debacle continues
This increase should suffice through 2013. The financial market has soon reacted to the news as the US dollar appreciated against major currencies, while gold and silver prices declined (see below).
There will continue to be ramifications for this recent debt limit increase as the US economy is still struggling on the one hand and its debt continues to grow on the other.
US Dollar / Gold & silver prices – July & August update
The Euro to US dollar exchange rate inclined on Friday by 0.45%; during July this exchange rate fell by 0.7%. The US dollar also moderately depreciated against other currencies including the YEN by the end of July. Currently, the US dollar is traded up, which might be stem, in part from the recent news about raising the US debt ceiling. If this trend will continue it could have a negative effect on gold and silver prices and pressure them to trade down.
US ISM Manufacturing PMI
This report will indicate the monthly change in manufacturing sector on a national level. During June ISM Manufacturing PMI inclined to 55.3% an increase of 1.8 percent points compared to the previous month’s index; if this index will continue to be robust and incline, it may further strengthen the US dollar and consequently affect gold and silver prices.
Current Gold and Silver prices
The precious metals prices are currently traded with mixed trend in the U.S. market:
The current gold price short term future (September 2011 delivery) is traded at $1,632.3 per t oz. a $1.1 increase or 0.07% as of 16:53*.
Current silver price, short term futures is at $39.935 per t oz – a $0.171 decline or 0.43%, as of 16:54*.
The current ratio of gold to silver prices is at 40.87.
Gold and silver prices Outlook:
Gold and silver prices started off August with no clear direction, but they might come down during the day. This might be stem, in part, from the recent news from the US on raising the debt ceiling as the uncertainty in the financial market has subsided, and causing the demand for gold and silver, as a safe heaven, to drop; there might also be speculative movement in the bullion market as traders might seek to cash out from the sharp rises in gold and silver prices during July. In any case, July is over and August brings new rules and might bring new direction for gold and silver prices.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
15.00 – U.S. ISM Manufacturing PMI
2:30 – Australian trade of Balance
5:30 – Reserve Bank of Australia – rate decisions statement
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.