Gold and silver prices suffered a sharp drop yesterday; as a result, they have completed 4.2% and 5.1% deceases, respectively from the end of last week. Currently, however they are traded slightly up. The recent announcement of ECB along with the Fed to issue US dollar based loans to European Banks may have helped restore some confidence in the European market and consequently rallied up the Euro against the US dollar. This news also eclipsed the negative results of the Philly Fed Manufacturing Index. The declines in precious metals prices coincided with the recent rally of US stock markets and the rise in US Treasury bills yields. Today, US TIC long term purchases will also be published.
Let’s examine the precious metals market for today, September 16th:
Gold and silver prices –September
Gold and silver prices sharply declined yesterday: Gold price fell on Thursday by 2.47% to $1,781; silver price also declined by 2.55% to $39.50. During September, gold price declined by 2.7% while silver price fell by 5.4%. 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 stats to slowly pick up in recent days; on Thursday, September 15th the ratio slightly inclined again to 45.10. During September, gold price has slightly outperformed silver price as the ratio slightly inclined by 2.8%.
On Today’s Agenda:
US TIC long term purchases: This upcoming report of the main changes in the purchases and sales of US long term treasuries in July, will provide some insight into the change in US Treasuries longer-term notes – a market that is highly correlated with the changes in the bullion market (see here my last review of June 2011).
US Dollar / Gold & silver prices – September update
The Euro to USD continued its recovery as it slightly inclined yesterday by 0.89% to 1.3877; during September the EURO/USD rate fell by 3.4%.
S&P500 / Gold & silver prices – September update
The S&P500 index continue to rise as it inclined yesterday by 1.72% – during the week it has completed a 4.75% rally, but during September the S&P500 index fell by 0.80%. The negative correlation between the S&P500 index and gold and silver prices suggest that the ongoing drop of 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 continue to rise; yesterday they have gained 0.06 percent points to 2.09% – the highest rate since the beginning of the month; during September they have fallen by 0.14 percent points. US 10-year Treasury yield has a strong negative correlation with gold price daily percent changes (see chart below); 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 slightly up in the European markets:
Current gold price short term future (October 2011 delivery) is traded at $1,787.1 per t oz. a $5.7 or 0.32% increase as of 12:18*.
Current silver price short term future is at $40.075 per t oz – a $0.574 or 1.45% incline as of 12:18*.
The current ratio of gold to silver prices is at 44.59.
Gold and silver prices Outlook:
Gold and silver prices sharply fell during the week (so far) and may continue to do so as the confidence in the financial markets are regained; this change is reflected not only in the bullion market, but also in the American and European stock markets and the long term US Treasury bill market. This trend may continue today, but eventually the problems the US and Europe are facing may rekindle the surge of gold and silver prices.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
14:00 – US TIC long term purchases
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.