Gold and silver prices started the week the same way they have ended last week- falling. Despite the sharp fall of silver price on Monday, gold price and many other commodities prices such as crude oil prices didn’t change much that day. Will this slow pace trading continue? Currently gold and silver prices are sharply decreasing. Today the revised Euro Area GDP for quarter four of 2011 will be published (update as expected the EU GDP contracted by 0.3% in Q4) and Australia’s GDP for the fourth quarter of 2011.
Here is a short review on gold and silver prices for Tuesday, March 6th:
Gold and Silver– March Update
Gold price slightly fell on Monday by 0.35% to $1,703.9; silver even more than gold declined by 2.4% to $33.70. During the month, gold declined by 0.4% and silver by 2.73%.
The chart below shows the movements of gold and silver during the last couple of weeks (prices are normalized to February 16th).
The ratio between gold and silver rose on Monday, and reached 50.57. During the month the ratio rose by 2.37% as gold has moderately outperformed silver. In the chart below are the changes in this ratio during February and March.
During the past several months there has been a rise in the volatility of gold and silver prices especially after the sharp movements during last week. The chart below shows the development of the standard deviations of gold and silver prices daily percent changes during recent months (the figures of March are significant because there are only few samples).
Revised Euro Area GDP Fourth Quarter 2011: This will be a revised version of the recent report. According to the recent report during the fourth quarter of 2011, the Euro Area GDP edged down by 0.3% (Q-o-Q). If the upcoming report will show weaker numbers it could further trade down the Euro, and in turn may also adversely affect precious metals prices (see here recent report);
Australian GDP Fourth Quarter 2011: This quarterly report will show the change in Australia’s GDP growth rate in the fourth quarter 2011. In Q3 2011, the GDP expanded by 1.0% in annual terms (seasonally adjusted). Australia is among the leading countries in exporting precious metals. This report could offer some insight to the progress of the Australian economy and consequently affect Aussie dollar, which is strongly correlated with metals prices (see here last report);
Forex / Gold & Silver Market – March
The Euro/U.S Dollar slightly rose on Monday by 0.14% to 1.3217. During the month Euro/U.S Dollar decreased by 0.81%; on the other hand, the Australian dollar and Canadian dollar depreciated against the U.S. dollar by 0.58% and 0.54%, respectively. These currencies pairs are historically correlated with the changes of gold and silver prices, even though in recent weeks their linear correlations have weakened (e.g. as indicated in the chart below, the linear correlation between gold price and Aussie dollar/USD is at 0.24); if the Euro and Australian dollar will decline during the day; it may indicate gold and silver prices will also decrease. Currently, the Euro/USD is rising.
Gold (April 2012 delivery) is traded at $1,668.8 per t oz. a $35.1 or 2.06% decrease as of 17:24*.
Silver (April 2012 delivery) is at $32.6 per t oz – a $1.095 or 3.25% decrease as of 17:24*.
Gold and Silver Daily Estimate
Gold and silver prices kicked off the week declining. The recent downward trend of the few days (they have traded down during the last three out of the four business days) may continue especially if the Euro and Aussie dollar will traded down against the U.S. dollar as they have in recent days. Finally, the upcoming GDP reports of Australia and EU may affect their respective currencies and in turn could also affect the direction of gold and silver prices.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
10:00– Revised Euro Area GDP 4Q2011
2:30 – Australian GDP Fourth Quarter 2011
12:00 – German Factory orders
13:15 – ADP estimate of U.S. non-farm payroll
15:30 – EIA Crude Oil Stockpiles Report
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