The stock markets sharply fell again yesterday, while gold and silver prices inclined again. Gold and silver prices are traded down. Today, many reports will be published including Canadian and American trade balance reports, ECB monthly bulletin and US unemployment claims. Australian unemployment report didn’t show much improvement.
Let’s examine the precious metals market for today, August 11th:
Gold and silver prices –August
Gold price inclined for the third consecutive day, yesterday by 2.37% to new high of $1,784; silver price also followed and inclined by 3.81% to $39.33.
During August, gold price increased by 9.4%, but silver price fell by 1.9%.
The chart below shows the normalized gold and silver prices (July 29th 2011=100). Gold price continues its upward trend during most of August; on the other hand, silver price seems to have taken a different direction and fell very sharply.
The gold to silver ratio: the ratio between gold and silver prices slight fell yesterday after silver price bounced back; the ratio reached yesterday Wednesday, August 10th 45.37. During August gold price has outperformed silver price as the ratio inclined by 11.6%.
The S&P500 along with other stock indexes fell again sharply yesterday. This reaction dragged along with it all major commodities including gold and silver. The correlation between bullion prices and S&P500 isn’t reliable, but the downward trend of S&P500 is inline with the rise in gold price and to some extent even with the recent rises in silver price. The chart below shows the changes in S&P500, gold price and silver price during August (normalized to July 29th=100).
Australian unemployment grew to 5.1%
Yesterday the Australian Bureau of Statistics published its monthly labor report. The report didn’t show an improvement as the seasonally adjusted number of unemployed persons rose by 18 thousand, and the rate of unemployment inclined by 0.2 percent points from 4.9% to 5.1%. This report might have affected some traders to trade down AUD, which could have affected gold prices which is usually correlated to this currency in stable times, but due to the high volatility in the markets this news is likely to have little effect on the AUD and gold prices.
US Dollar / Gold & silver prices – August update
The Euro to US dollar exchange rate continue to zigzag over the concerns in Europe and the expected low rates in the US that push and pull this exchange rate into different directions. Yesterday, the Euro to US dollar fell by 1.38%; the US dollar sharply appreciated against other currencies including the Australian dollar and Canadian dollar. This shift might have curbed some of the gains to gold and silver prices, even though the changes in the US dollar seem to have less of an effect on the changes in gold and silver prices