Gold and silver prices started off the week with very sharp gains. Yesterday’s gains were the sharpest this month (so far), which only goes to show how February is much less volatile than January. Currently gold and silver prices are falling. Today, Euro Area Manufacturing PMI report will be published along with the Minutes of the last MPC Meeting, and the U.S. Existing Home Sales.
Here is a short analysis for metals prices and a review of the news and events related to gold and silver for Wednesday, February 22nd:
Gold and Silver– February Update
Gold price sharply increased on Tuesday by 1.89% to $1,758.5; silver also rose by 3.66% to $34.50. During February, gold rose by 1% and silver by 3.72%.
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 decreased on Tuesday, February 20th at 50.97. During February the ratio slightly declined by 2.59% as silver has moderately outperformed gold. In the chart below you can see the changes in this ratio during February.
On Today’s Agenda
U.S. Existing Home Sales: in the previous report regarding December the number of homes sold rose by 5% to a seasonally adjusted annual rate of 4.61 million home sales (see here the recent review);
Euro Area Manufacturing PMI (January 2012): In the recent flash report regarding January 2012, the Euro Zone Manufacturing PMI changed direction and reached 50.4 – a move toward the positive for the first time in five months. This report will provide an indicator to the economic development of the Euro zone’s manufacturing conditions; this news, in turn might affect the Euro and consequently major gold and silver prices;
BOE MPC Meeting Minutes: Following the last Bank of England MPC meeting, in which it was announced the rate will remain unchanged at 0.5% and the asset purchase program will increase by £50 billion to £325 billion, the minutes of the meeting might explain the recent decision;
Forex / Gold & Silver Market – February
The Euro/U.S Dollar slightly fell on Tuesday by 0.07% to 1.3234. During February Euro/U.S Dollar increased by 1.15%; furthermore, the Australian dollar and Canadian dollar also depreciated against the U.S. dollar by 0.86% and 0.34%, respectively. The correlation between Aussie dollar, Canadian dollar and precious metals prices is still strong. Therefore, if the Euro, Canadian dollar and Australian dollar will continue resume their upward trend; it could indicate that precious metals prices will also trade up. Currently, the Euro/USD and AUD/USD are slightly rising.
Current Gold and Silver Prices February 22nd
Gold (March 2012 delivery) is traded at $1,753.9 per t oz. a $4.6 or 0.26% decrease as of 13:55*.
Silver (March 2012 delivery) is at $34.115 per t oz – a $0.385 or 1.12% decrease as of 13:54*.
(* GMT)
Gold and Silver Daily Outlook
Gold and silver prices started off the week with very sharp gains; this rally might be related to the recent development in Europe regarding the approval of the Greek bailout package and the effect it had on the Euro and other currencies on Monday when the market had anticipated this news. The upcoming reports regarding the U.S. home sales and EU manufacturing PMI might affect the direction of gold and silver prices via their relation with USD and Euro. I speculate gold and silver prices will continue their upward trend but at a slower pace than yesterday.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Today
09:00 – Euro Area Manufacturing PMI
09:30 – MPC Meeting Minutes
15:00 – U.S. Existing Home Sales
15:30 – EIA U.S. Crude Oil Market Report
Tomorrow
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
For further reading: