Gold and silver prices continue to zigzag: yesterday they have ended slipping. The recent rally in the American and European stock markets in the past several days, along with the rise in U.S. Treasury bills yields might suggest that traders have slightly eased their concerns over the Euro Area debt crisis and the growth of the US economy. The recent announcement of the ECB to provide US dollar based loans to European banks may have eased the concerns of traders regarding Euro debt and resulting in gold and silver prices traded down. Today there are many publications that may affect the trade in financial markets; one of the reports is the Philly Fed Manufacturing Index, if this index will show a rise, it could provide some further back-wind to the US stock markets to rise. Consequently it may trade down bullion prices. Today, in addition to the Philly Fed Manufacturing Index, US unemployment claims will also be published, ECB conference in which Trichet will speak, Euro Area and US consumer price indexes reports.
Let’s examine the precious metals market for today, September 15th:
Gold and silver prices –September
Gold and silver prices declined yesterday: Gold price fell on Wednesday by 0.20% to $1,826; silver price also declined by 1.60% to $40.53. During September, gold price declined by 0.3% while silver price fell by 3.0%. The chart below (normalized gold and silver prices (August 31st 2011=100)) shows the price development of precious metals during September.
The ratio between gold and silver prices continues be around 43-45; on Wednesday, September 14th the ratio slightly inclined again to 45.06. During September, gold price has slightly outperformed silver price as the ratio slightly inclined by 2.8%.
On Today’s Agenda:
Philly Fed Manufacturing Index: This report was likely one of the reports factors that affected traded to trade down the US stock markets and trade up gold and silver prices last month as the Philly Fed Manufacturing Index showed sharp drop in the index to -30.7 for August. The current expectations are a slight increase in the index;
Euro Area CPI: In July the annual inflation rate declined to 2.5%, a 0.2 percent point drop compared with June’s inflation; the expectations in the upcoming CPI report for August 2011 are a slight decline. This news might affect the Euro currency, ECB’s October rate decision and consequentially gold prices;
U.S. unemployment claims: For the week ending on September 3rd, initial claims rose by 2,000 to 414,000 claims; the insured unemployment rate remained unchanged at 3.0% for the week ending on August 27th; this report might affect EURO/USD and consequently gold and silver prices;
US CPI: This report will show the main changes in the consumer price index during August. In July 2011, the CPI inclined by 0.5% and over the last 12 months by 3.6%.
ECB conference Trichet speaks: following the recent rate decision in which ECB kept the rates unchanged at 1.5%, Trichet will give a speech regarding the economic stability of the Euro Area;
US Dollar / Gold & silver prices – September update
The Euro to USD slightly inclined yesterday by 0.56% to 1.3755; during September the EURO/USD rate fell by 4.3%. The recent depreciation of US dollar against the Euro may have curbed some of the decline in gold and silver prices yesterday.
S&P500 / Gold & silver prices – September update
The S&P500 index continue its rally and inclined yesterday by 1.35%; during September, S&P500 index fell by 2.48%. The negative of the S&P500 index with gold and silver prices suggest that the recent decline in precious metals’ prices coincides with the rally in the US stock markets.
US Treasuries / Gold & silver prices – September update
The US 10-year Treasury yields inclined again, yesterday by 0.03 percent points to 2.03%; during September they have fallen by 0.20 percent points. US 10-year Treasury yield has a strong negative correlation with gold price daily percent changes; thus the recent rise in yields reflects the slowdown in the recent purchase spree by traders of safe heave securities.
Current Gold and Silver prices
The precious metals prices are currently traded down in the European markets:
Current gold price short term future (October 2011 delivery) is traded at $1,817.5 per t oz. a $9.0 or 0.49% decrease as of 09:25*.
Current silver price short term future is at $40.455 per t oz – a $0.078 or 0.19% decline as of 09:25*.
The current ratio of gold to silver prices is at 44.92.
Gold and silver prices Outlook:
Gold and silver prices continue to zigzag with no clear direction during September; the rally of the past few days in the US stock markets, along with the rise in long term US treasury bill yields suggest that traders are slowing their shopping spree for not only long term US treasury bills but also gold and silver. If the Philly Fed Manufacturing Index will be positive, it may provide some back-wind to US stocks and thus further trade down gold and silver. Furthermore, if the US CPI will not rise, it may also cause silver price to fall.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
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
14:00 – US TIC long term purchases
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.