Gold and silver changed direction throughout the week and their volatility has risen compared with their low volatility levels during most of February. The main shift started on Tuesday when silver price rose by 4.5%. This gain didn’t seem related to development of gold price as gold only added 0.76% to its value that day. I refereed to the unexpected rally of silver in a recent post; basically I thought it was mostly a speculative move. The following day, Bernanke testified in the House of Representatives: he was encouraged from the positive results the U.S. economy had presents in recent weeks; he also didn’t commit to another stimulus plan even though he didn’t completely close the door on it. This news however along with the positive U.S. GDP growth rate for Q4 2011 report, signaled to many bullion traders the FOMC won’t announce QE3 in the upcoming March meeting. As a result, gold and silver tumbled on Wednesday. Gold and silver bounced back on Thursday, perhaps due to the slight fall in the U.S Manufacturing PMI growth rate. Finally, precious metals prices ended the week falling as many currencies mainly the Euro and Aussie dollar depreciated against the U.S dollar.
Here is a short summary of the development of gold and silver prices between February 27th and March 2nd 2012:
Precious Metals Prices Weekly Recap:
Gold price sharply fell during last week by 3.75%; furthermore, during last week the average gold price reached $1,741 /t. oz which is 1.27% above the previous week’s average price of $1,763 /t. oz. Gold price ended the week at $1,709 /t. oz.
Silver price, much like gold, sharply decreased on a weekly scale by 2.53%; on the other hand, this week’s average price reached $35.53/t oz which is 2.58% above the previous week’s average $34.63/t oz. The average price rose last week because of the sharp gain in silver price on Tuesday.
During the week, the average daily percent change of gold price fell by 0.74%; silver price also decreased by an average daily rate of 0.42%.
In the following graph are the shifts in silver and gold prices, which were normalized to 100 to the end of last week – February 24th. Gold and silver prices declined during most of last week.
The second graph shows the daily percent changes of gold and silver (or in other words the shifts around the trend). Gold and silver prices zigzagged during the week from gains to losses on daily scale as their daily percent changes ranging between 4.5% gain to a 6.9% loss.