Gold and silver prices continue to seek direction in September. Despite the sharp changes in gold and silver prices throughout the month, gold price (as of yesterday) fell by only 0.1%, and silver price by 1.4%; the sharp appreciation of the USD against major currencies mainly the Euro over the debt crisis in the Euro Area may have adversely affected gold and silver prices, while the declines in US stock markets and US Treasury bills yields during September suggest traders are seeking safe havens including gold and silver. Today, the US PPI report will be published and the US changes in retail sales.
Let’s examine the precious metals market for today, September 14th:
Gold and silver prices –September
Gold and silver prices slightly inclined yesterday: Gold price inclined on Tuesday by 0.93% to $1,830; silver price also rose by 2.43% to $41.19. During September, gold price slightly declined by 0.1% while silver price fell by 1.4%. The chart below (normalized gold and silver prices (August 31st 2011=100)) presents the price development of precious metals during September.
The ratio between gold and silver prices continues be around 43-45; on Tuesday, September 13th the ratio slightly rose to 44.43. During September, gold price has slightly outperformed silver price as the ratio slightly inclined by 1.3%.
On Today’s Agenda:
U.S. PPI: In the previous July report, the PPI increased by 0.2%, after a drop of 0.4% in June; this news could have an effect on gold and silver prices – update: US PPI for August remained unchanged.
US retail sales: in last month’s report about July, the retail sales slightly inclined by 0.5% from the previous month.
US Dollar / Gold & silver prices – September update
The Euro to USD didn’t do much yesterday and slightly declined by 0.01% to 1.3678; during September the EURO/USD rate fell by 4.8%. The appreciation of US dollar against the Euro during September may have affected gold and silver to trade down. On Tuesday the US dollar depreciated against other major currencies that are correlated with gold and silver prices such as CAD and YEN. But the AUD/USD exchange rate continued to decline, yesterday by 0.34%. This exchange rate was highly correlated with gold and silver prices in recent months and could be linked to the recent decline in the bullion market.
US Treasuries / Gold & silver prices – September update
The US 10-year Treasury yields inclined yesterday by 0.06 percent points to 2.00%; during September they have fallen by 0.23 percent points.
During September (up to date) the linear correlations between daily changes in US 10-year Treasury yield and gold and silver prices daily percent changes were -0.631 and -0.189, respectively. The recent rise in yields may suggest that the growth in demand for US Treasury bills has slowed down.
S&P500 / Gold & silver prices – September update
The S&P500 index slightly inclined yesterday by 0.91%; during September, S&P500 index fell by 3.78%. During September the S&P500 index had negative correlations with the daily percent changes of gold and silver prices of -0.705 and -0.160, respectively. If the stock market will continue to rise, it may further affect gold and silver prices to trade down.
Current Gold and Silver prices
The precious metals prices are currently traded with mixed trends in the European markets:
Current gold price short term future (October 2011 delivery) is traded at $1,835.3 per t oz. a $5.2 or 0.28% increase as of 09:27*.
Current silver price short term future is at $41.010 per t oz – a $0.183 or 0.44% decline as of 09:28*.
The current ratio of gold to silver prices is at 44.75.
Gold and silver prices Outlook:
Gold and silver prices continue to seek direction during September as the weak Euro and AUD against the USD may have affected gold and silver to trade down, while the weak performance in the US stock markets in recent weeks along with the decline in long term US treasury bill yields may have suggested traders are also seeking gold and silver. The change in the past couple of days, in which US stock markets are slightly rising and US treasury bill yields are also inclining might suggest that traders are gradually curbing their enthusiasm towards financial safe havens. If this trend of the past couple of days will continue, it may further affect gold and silver to trade down. But if this trend won’t pan out then during the remainder of September, I still speculate gold and silver prices will continue to rise at a slow pace.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13.30 – U.S. producer price index
15:30 – Changes in US retail sales
15:30 – EIA report about Crude oil inventories
9.00 – ECB monthly bulletin
10:00 – Euro Area CPI and core monthly inflation (August)
13:30 – Department of Labor report – U.S. unemployment claims
13:30 – Report on US CPI
15.00 – Philly Fed Manufacturing Index
15:30 – EIA report about Natural gas storage
19:00 – ECB conference Trichet speaks
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.