Gold and silver prices bounced back yesterday and sharply inclined after they had fallen in the past three business days. Currently, gold and silver prices are traded down. The speculation around the upcoming speech of Bernanke may affect trading throughout the day. Many also anticipate tomorrow’s German voting on another bailout package for Greece that could ease the uncertainty in the financial community over the stability of the Euro Area. Today, the U.S. Core Durable Goods report will be published.
Here is a market outlook of precious metals prices for today, September 28th:
Gold and Silver Prices –September
Gold and silver prices shifted to green and increased yesterday: Gold price added on Tuesday 2.74% to its value to $1,652; silver price increased by 5.20% to $31.52. During September, gold price fell by 9.8% and silver price decreased by 24.5%. The chart below shows the recent shift in gold and silver prices as they rose yesterday and thus broke the downward trend of the past three days (normalized gold and silver prices (August 31st 2011=100)).
The ratio between gold and silver prices decreased on Tuesday, September 27th to 52.40. During September, silver price declined by a much higher rate than gold price as the ratio increased by 19.5%.
On Today’s Agenda:
Bernanke Speaks: following the decision of FOMC to purchase LT securities and to sell ST securities, the Chairman of the Fed is likely to address the recent FOMC plan and may also refer to the sharp market reactions in the past couple of days of last week;
U.S. Core Durable Goods: This upcoming August report will indirectly show the changes in U.S. demand for goods including major commodities. During July 2011, manufactured durable goods increased by $7.7 billion or 4.0% to $201.5 billion (for the full report);
US Dollar / Gold & Silver Prices – September Update
The EURO/USD exchange rate along with other exchange rates rose yesterday: the Euro to USD gained 0.38% to reach 1.3585; the AUD/USD added 0.82% to its value; the USD/CAD slipped by 0.57%. The recovery of the major currencies against the USD in the past few days over the new hope of the German Parliament approving the bailout program for Greece tomorrow; many think that this rally of the Euro won’t last long. But for now, this rally in Euro and other currencies may contribute gold and silver prices to halt their falls.
U.S. Treasuries / Gold Price – September Update
The US 10-year Treasury yield rose by 0.09 percent points to 2%, but during September it has fallen by 0.23 percent points. The recent increase in LT securities’ yields was a shift in the direction of recent months. The recent rise in yields was probably stemmed, in part, from the announcement of CME to raise margins on long term securities. There was a negative correlation between the US long term Treasury yields and gold price daily percent changes in recent months (in September the correlation was -0.203), so that if the US securities’ demand will continue to fall, they may also coincide with the decrease in gold price, as traders move away from safe haven investments and into the stock markets.
S&P500 / Gold Price – September Update
The S&P500 index increased for the past three business days; yesterday it increased by 1.07%; during September the S&P500 index declined by 3.57%. The weak negative correlation between the S&P500 index and gold price (as of September it was -0.206) suggest that if the US stock markets will change their direction and fall, they may also affect traders to trade up gold price.
Current Gold and Silver Prices
The precious metals prices are currently traded down in the U.S. markets:
Current gold price short term future (October 2011 delivery) is traded at $1,614.3 per t oz. a $38.2 or 2.31% decrease as of 20:07*.
Current silver price short term future is at $30.19 per t oz – a $1.346 or 4.27% decline as of 20:07*.
The current ratio of gold to silver prices is at 53.46.
Gold and Silver Prices Outlook:
Gold and silver prices changed direction from the falls in the past three days and increased yesterday. The hike in the US stock markets and US securities yields might suggest that trader shifted in the past few days from bonds to the stock market; this might be stemmed from the speculation around of European policymakers approving the bailout program of Greece. Therefore, the correction in the precious metals’ market for the CME margin hike seems to be over, and now with the low rates of gold and silver prices, traders may slowly return to the bullion market. By the end of September, I still speculate that gold and silver prices will slowly recover from their sharp drops in the past few days, but will finish the month well below their initial price level from the beginning of September.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
13:30 –Report on U.S. Core Durable Goods
15:30 – EIA report on crude oil stockpiles
22:00 – Bernanke Speaks
13:30 –U.S. Unemployment Claims
13:30 – Final US GDP 2Q 2011 Report
15:00 – U.S. pending Home Sales
15:30 – EIA report on US Natural Gas Market
For further reading:
- Gold and silver prices outlook for September 2011
- Weekly Outlook for September 26-30
- Gold & Silver Prices | Weekly Recap 19-23 September
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.