Gold and silver prices bounced back and rose yesterday. Currently, gold and silver prices are traded down. Yesterday, ECB kept its rate unchanged, the US unemployment claims slightly inclined, President Obama presented his job creation plan before Congress and Federal Reserve chairman Bernanke gave a speech about the economic outlook of the US. Today, the Canada employment report will be published and the Canadian Housing Starts report.
Let’s examine the precious metals market for the last day of the week, September 9th:
Gold and silver prices –September
Gold and silver prices finished yesterday rising: Gold price rose on Thursday by 2.20% to $1,857; silver price also inclined by 2.16% to $42.53. During September, gold price slightly inclined by 1.4% and silver price by 1.8%. The chart below (normalized gold and silver prices (August 16th 2011=100)) shows the price development of precious metals in recent weeks.
The ratio between gold and silver prices continues to hover around 43-44; on Thursday, September 8th the ratio slightly fell to 43.68. During September, silver price has slightly outperformed gold price as the ratio declined by 0.4%.
ECB kept rate unchanged
As expected, ECB President, Jean Claude Trichet announced that the ECB interest rate for September will remain unchanged at 1.5%. He also addressed the slow down in the Euro Area and the moderation in the recent Euro Area inflation pressures. The Euro to US dollar exchange rate may have reacted to this news as it fell very sharply yesterday (see below). This news also didn’t help ease the concerns of traders as gold and silver prices traded up yesterday.
U.S. unemployment claims – inclined by 2,000
According to the recent U.S. jobless claims report initial claims rose by 2,000 for the week ending on September 3rd to 414,000 claims (seasonally adjusted data). This news didn’t look well on the US labor market.
On Today’s Agenda:
Canada unemployment rate and employment report: In the recent July report, employment slightly inclined, and unemployment rate slipped by 0.2 percent points to 7.2%. If this report will continue show an ongoing improvement in the Canadian labor market it might further strengthen the Canadian dollar and consequently might influence the prices of major commodities that CAD is correlated with, including gold and silver prices.
US Treasuries / Gold & Silver Prices – September Update
The US 10-year Treasury yields continue to zigzag and fell yesterday by 0.05 percent points; during September they have fallen by 0.23 percent points. This means the demand for U.S. Treasury bills is still robust as their yields decreased. If yields will continue to fall, it may indicate that traders are still seeking safe havens such as gold and silver.
S&P500 / Gold & Silver Prices – September Update
The S&P500 index fell yesterday by 1.06%. During September, S&P500 index fell by 2.71%. Furthermore, during August- September the S&P500 index had negative correlations with the daily percent changes of gold and silver prices of -0.48 and -0.36, respectively. The unclear direction the stock market is heading also affects gold and silver prices to zigzag during the week. But if throughout the day the S&P500 index will further declined, it may affect gold and silver prices as well.
US Dollar / Gold & silver prices – September update
The Euro to US dollar exchange rate resumed its descent and fell yesterday by 1.53%; during September the EURO/USD rate fell by 3.4%. The appreciation of US dollar against the Euro didn’t seem to affect gold and silver prices yesterday as they were traded up. The US dollar also sharply depreciated yesterday against other major currencies including Australian dollar and Canadian dollar.
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 $1,843.0 per t oz. a $14.5 or 0.78% decrease as of 11:43*.
Current silver price short term future is at $41.865 per t oz – a $0.665 or 1.56% decline as of 11:45*.
The current ratio of gold to silver prices is at 44.02.
Gold and silver prices Outlook:
Gold and silver prices changed direction again and bounced back from the falls they have had in the previous days. The recent rise is consistent with the drop in US Treasury bills yields and the decrease in US stock markets indexes. The recent ECB rate decision, President Obama’s speech about job creations or Bernanke speech that was given yesterday didn’t seem to ease the concerns in the financial markets for now and only further pushed traders towards gold and silver. 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 (all times GMT):
12:00 – Canada unemployment rate and employment report
13:15 – Canadian Housing Starts
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.