Gold and silver prices changed directions several times during yesterday’s trading but eventually ended the day with slight shifts as gold price slightly declined and silver price moderately rose. The recent FOMC meeting didn’t introduce any new stimulus plans. This news may keep adversely affecting the direction of precious metals prices during today’s trading. The rise in U.S. retail sales may have helped rally many commodities prices mainly oil and natural gas. Currently gold and silver are traded sharply down. On today’s agenda: Euro Area Annual Inflation and Bernanke’s Speech.
Here is a short review on gold and silver prices for Wednesday, March 14th:
Gold and Silver– March Update
Gold price declined on Tuesday by 0.33% to $1,694.2; silver on the other hand increased by 0.5% to $33.58. During the month, gold slipped by 1% and silver declined by 3.06%.
The chart below shows the changes in gold and silver during March (prices are normalized to February 29th).
The ratio between gold and silver edged down on Wednesday, and reached 50.45. During the month the ratio rose by 2.13% as gold has outperformed silver. In the chart below are the changes of this ratio during the month.
FOMC Keeps Policy Unchanged
As expected the FOMC decided yesterday to stay on the fence for the time being and didn’t commit to another stimulus plan. The FOMC stated in its statement that since there are signs of recovery in the U.S. economy mainly in the U.S. labor market – the recent non-farm employment report is backing up this claim, there won’t be any new additional stimulus plans for now. In a previous post I have referred to the positive relation between the U.S money base and the changes in gold price. Following this news gold price sharply declined but by the end of trading managed to bounce back and finish the day only 0.33% down.
On Today’s Agenda
Bernanke Speech: following yesterday’s FOMC meeting the Chairman of the Federal Reserve will give a speech might have some influence on the forex and commodities markets. The title of the speech is “Community Banking“;
Euro Area Annual Inflation: the inflation in Euro Area reached 2.6% in February (flash report), while to core CPI reached 1.5%. If the CPI will continue to decline, it may raise the chances that ECB will cut the Euro interest rate cut next month;
Forex / Gold & Silver Market – March
The Euro/U.S Dollar remained virtually unchanged on Tuesday at 1.3155. During the month Euro/U.S Dollar decreased by 1.28%; further, the Australian dollar and Canadian dollar also didn’t move much and finished yesterday’s trading slightly rising against the U.S. dollar by 0.11% and 0.03%, respectively. These currencies pairs are historically linearly linked with the daily movement of gold and silver prices; therefore the shifts in the Euro Australian dollar and Canadian dollar during the day may indirectly affect the path of gold and silver prices. Currently, the Euro/USD is slightly falling.
Current Gold and Silver Prices March 14th
Gold (April 2012 delivery) is traded at $1,669.1 per t oz. a $25.1 or 1.48% decrease as of 07:57*.
Silver (April 2012 delivery) is at $33.01 per t oz – a $0.571 or 1.7% decrease as of 07: 57*.
(* GMT)
Gold and Silver Daily Estimate
Precious metals prices continued their slow descent. The recent FOMC statement from yesterday confirmed what many had already anticipated that there won’t be in any news QE3 for the time being. This news may continue have lingering effects gold and silver and may keep trading them down. Today’s speech of Bernanke may affect bullion traders if he will shake things up and state something unexpected. The EU inflation rate may affect the direction of the Euro/USD and consequently gold and silver prices.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Today
10:00 – Euro Area Annual Inflation
14:00 – Bernanke Speech
Tentative –IEA monthly oil report
15:30 – EIA Crude Oil Stockpiles
Tomorrow
08:30 – Libor Rate of Swiss National Bank
14:30 – U.S. Department of Labor– Jobless Claims Weekly Update
14:30 – U.S. Producer Price Index
14:00 – U.S. TIC Long Term Purchases
15:00 – Philly Fed Manufacturing Index
15:30 – EIA U.S. Natural Gas Market Report
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