Gold and silver prices finished the week on a negative note despite their sharp gains of recent weeks. Currently gold and silver prices are declining. Today, the Swiss National Bank Forex Reserves will be published. Other financial reports that will come out today include: German Factory orders report; RBA Rate Statement.
Here is a report of major news and events, and an analysis of metals prices for Monday, February 6th:
Gold and Silver– February Update
Gold price changed direction and declined on Friday by 1.08% to $1,740.3; silver also decreased by 1.25% to $33.75. During February, gold declined by only 0.01% while silver added 1.46% to its value.
The chart below shows the development of prices of gold and silver during past weeks (metals are normalized to 100= January 13th).
The ratio between gold and silver slightly rose on Friday, February 3rd and reached 51.57. During February the ratio fell by 1.45% as silver has very slightly outperformed gold. In the chart below is the development of this ratio during January and February.
Despite the sharp changes in gold and silver prices during January and February, their daily percent changes’ standard deviations are declining compared with their standard deviations in few months earlier; this means the volatility of precious metals prices is decreasing.
On Friday, the U.S. labor force expanded by 243,000 during January, according to the recent non-farm payroll report. The rate of unemployment declined to 8.3% – the lowest level in over two years. This news suggests the U.S. labor force is slowly recovering from its slowdown and thus lowers the chances of another intervention by the Fed (i.e. another QE plan).
On Friday, bullion prices declined and I suspect this news may have been among the key factors in affecting the direction of gold and silver prices. I have already referred to the relation between metals prices and Labor force changes in the February gold price monthly report.
The table below shows the strong negative correlation between precious metals price changes and development in Labor force (note: these findings should be taken with a grain of salt as I haven’t controlled for other variables and the relation isn’t significant; it should only be considered as a indicator/guess).
Swiss National Bank Forex Reserves: the central bank of Switzerland will publish the value of its foreign currencies reserves of the past month;
German Factory orders: this news will indicate the progress of the German Economy and consequently might affect the trading of the Euro and consequently bullion trading as well;
RBA – Cash Rate Statement: the overnight money market interest rate of Australia’s Reserve Bank remained unchanged at 4.75% since November 2010. The AUD/USD sharply increased during January by 4%; this report might affect the Australian dollar, a currency strongly related to the development of gold and silver prices.
Forex Market / Gold & Silver Market – February
The Euro/U.S Dollar didn’t do much during Friday’s trading and only slightly increased by 0.11% to 1.3158; during February Euro/U.S Dollar rose by 0.58%; other leading exchange rates such as Canadian dollar and Australian dollar also appreciated against the U.S. dollar. If the Euro and Australian dollar will change direction and trade down against the U.S Dollar it could indicate that precious metals prices will also decline. Currently, the Euro/USD is falling.
Current Gold and Silver February 6th
Gold price per ounce (March 2012 delivery) is traded at $1,733.8 per t oz. a $6.5 or 0.37% decrease as of 07:32*.
Silver price per ounce (March 2012 delivery) is at $33.59 per t oz – a $0.159 or 0.47% decrease as of 07:32*.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
08:00 – Swiss National Bank Forex Reserves
12:00 – German Factory orders
4:30 – Reserve Bank of Australia – Cash Rate Statement
11:00 – German Industrial Production
15:00 – Bernanke Testifies
For further reading:
- Gold and Silver Prices Weekly Outlook for February 6-10
- Weekly Outlook for February 6-10
- Gold and Silver Prices Outlook for February 2012
- Why is Gold More Expensive than Platinum?