Gold and silver prices continue to shift from gains to losses on daily basis. Yesterday precious metals prices ended slightly above Tuesday’s price levels. Currently gold and silver prices are falling.EU GDP for the Q4 2011 declined by 0.3%. This news may have adversely affected the Euro. Today, Bernanke will give a speech. There are also many reports to be published during the day including: U.S. Housing Starts (update: housing starts rose by 1.5%) U.S. jobless claims, U.S. Producer Price Index and Philly Fed Manufacturing Index.
Here is a report of major news and events, and an analysis of metals prices for Thursday, February 16th:
Gold and Silver– February Update
Gold price slightly rose yesterday by 0.61% to $1,728.1; silver also slightly increased by 0.18% to $33.41. During February, gold declined by 0.7% while silver rose by 0.44%.
The chart below shows the changes of gold and silver during February (prices are normalized to January 31st).
The ratio between gold and silver moderately increased on Wednesday, February 15th at 51.73. During February the ratio slightly declined by 1.14% as silver has moderately outperformed gold. In the chart below is the development of this ratio during February.
Despite the slight shifts in the ratio between gold and silver, their linear correlation is still robust and positive. The correlation is well over 0.85 but is slightly lower than the linear correlations of the past several months.
Philly Fed Manufacturing Index: This monthly survey gives an estimate for the progress of the US economy as it measures the manufacturing conditions. In the last January survey, the report showed the growth rate moderately rose to +7.3 in January 2012. This index might affect the direction of gold price assuming there will be a sharp shift in the survey’s outcome (see here last report);
U.S. Housing Starts: the U.S Census Bureau will publish today the recent developments in U.S housing starts; this figure was historically correlated with gold price – as housing starts rise , gold prices tended to decrease the following day (even when controlling to the U.S dollar effect); in the recent report, the adjusted annual rate declined by 4.1% (for the recent review); if the housing starts will decline again, it might indicate that gold will rise.
U.S. Building Permits: the adjusted annual rate of building permits declined by 0.1% in December 2011. If this report will continue to show a drop in the building permits rate, it may indicate that the US housing market isn’t recovering;
Bernanke Speech: following the Chairman of the Federal Reserve testimony and the recent FOMC meeting, Bernanke’s upcoming speech might have some influence on the forex and commodities markets. The title of the speech is named “Community Banking“;
U.S. Unemployment Claims: initial claims declined by 15,000 to 358,000 claims for the week ending on February 4th; the upcoming weekly update might affect the forex and commodities indexes;
U.S. Producer Price Index: In the last report regarding December this index for finished goods slightly fell by 0.1% compared with November’s rate but rose by 4.8% in the past 12 months; this news might influence gold and silver traders;
Forex / Gold & Silver Market – February
The Euro/U.S Dollar slightly declined again during Wednesday’s trading by 0.52% to 1.3066. During February Euro/U.S Dollar decreased by 0.13%; yesterday, the Australian dollar on the other hand slightly appreciated against the U.S. dollar. During recent months there were strong linear correlations among the EURO and Aussie dollar and precious metals. If the Euro and Australian dollar will trade down today, it could indicate that metals will follow and also decrease. Currently, the Euro/USD is declining.
Current Gold and Silver Prices February 16th
Gold (March 2012 delivery) is traded at $1,722.6 per t oz. a $5.5 or 0.32% decrease as of 06:38*.
Silver (March 2012 delivery) is at $33.295 per t oz – a $0.113 or 0.34% decrease as of 06:38*.
Gold and Silver Prices Outlook and Analysis
Gold and silver prices slightly rose yesterday but during the entire month of February nearly didn’t rise. This might indicate that precious metals traders are waiting for new developments from Europe and U.S. that will tilt the scales towards a certain direction. The upcoming reports to be published today regarding the U.S. housing market, producer price index and Philly Fed survey might offer some perspective on the progress of the U.S. economy. If these reports will show an economic slowdown it might help rally gold and silver prices during the day. Any new development from Greece might affect the Euro during the day. Finally the direction of the Euro, Canadian dollar and Australian dollar might also affect the direction of metals prices.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13:30 – U.S. Housing Starts
13:30 – U.S. Building Permits
13:30 –U.S. Unemployment Claims
13:30 – U.S. Producer Price Index
14:00 – Bernanke Speech
15:00 – Philly Fed Manufacturing Index
15:30 – EIA U.S. Natural Gas Market Report
13:00 – Canada’s Core CPI
13:30 –U.S core Consumer Price Index
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