Gold price continued its upward trend and moderately increased yesterday, while silver changed direction and was traded down. Currently gold and silver prices are increasing. The recent manufacturing PMI reports showed that EU and China’s manufacturing might have shrunk during February. This news may have curbed the rally of gold and silver prices during yesterday’s trading. Today, there is the G20 Meeting, U.S. Unemployment Claims weekly update will be published and the Governor Stevens testifies.
Here is a short analysis for metals market and a review of the main news items and events related to gold and silver for Thursday, February 23rd:
Gold and Silver– February Update
Gold price increased on Wednesday by 0.73% to $1,771.3; silver on the other hand declined by 0.5% to $34.33. During February, gold rose by 1.78% and silver by 3.20%.
The chart below presents the developments of gold and silver during the month (prices are normalized to January 31st).
The ratio between gold and silver sharply rose on Wednesday, February 21st and reached 51.60. During February the ratio slightly declined by 1.39% as silver has moderately outperformed gold. In the chart below are the changes in this ratio during February.
Despite the different directions gold and silver took yesterday, the linear correlation of their daily percent changes is still strong and high as indicated in the chart below.
On Today’s Agenda
U.S. Unemployment Claims: initial claims decreased by 13,000 to 348,000 claims for the week ending on February 11th; the number of insured unemployment also decreased by 100k to 3.426 million during the week of February 4th; the upcoming weekly update might affect the direction of the US dollar and consequently gold and silver prices ;
Governor Stevens testifies: governor Stevens, from the Bank of Australia, will testify in the House of Representatives regarding the economic condition and outlook of the Australian economy;
Forex / Gold & Silver Market – February
The Euro/U.S Dollar slightly rose on Wednesday by 0.11% to 1.3249. During February Euro/U.S Dollar increased by 1.3%; on the other hand, the Australian dollar and Canadian dollar depreciated against the U.S. dollar by 0.23% and 0.29%, respectively. The correlations among Aussie dollar, Euro and precious metals prices are still robust (the linear correlation between the Euro/USD and gold price is 0.32). Therefore, if the Euro will continue resume its rally; it could indicate that gold and silver prices will also rise. Currently, the Euro/USD is increasing.
Gold (March 2012 delivery) is traded at $1,775.8 per t oz. a $4.3 or 0.24% increase as of 07:27*.
Silver (March 2012 delivery) is at $34.425 per t oz – a $0.097 or 0.28% increase as of 07:27*.
Gold and Silver Daily Outlook
Gold and silver prices didn’t do much yesterday after they had started the week with very sharp gains. The upcoming U.S. unemployment claims weekly update might affect the direction of gold and silver prices via their relation with U.S dollar. I speculate gold and silver prices will continue their rally but at a slower pace than at the beginning of the week.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
All day – G20 Meeting
13:30 – Department of Labor Report – U.S. Unemployment Claims
15:30 – EIA U.S. Natural Gas Market Report
23:30 – Governor Stevens speaks
09:30 – GB revised GDP Q4 2011
15:00 – U.S. New Home Sales
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