Gold and silver prices bounced back from their three consecutive days of falls, and ended up yesterday’s trading in the green. There are still concerns revolving a Greek default, which may affect today not only forex markets but also precious metals markets. The recent news from this front is that 60% of private investors holding Greek bonds will join the debt swap. This news may ease the anxiety in the markets and thus boost the Euro along with gold and silver prices. Currently gold price is rising. According to Bloomberg bullion holdings in the Exchange Traded Products reached record holdings.If this direction will continue it further help rally gold prices. Today there are many items on the agenda including: ECB Press Conference and Euro Rate Decision(UPDATE: ECB left rate unchanged at 1%), U.S. Unemployment Claims weekly update, Australia’s Trade Balance report and China’s CPI.
Here is a short review on gold and silver prices for Thursday, March 8th:
Gold and Silver– March Update
Gold price rose on Wednesday by 0.71% to $1,683.9; silver even more than gold increased by 2.45% to $33.59. During the month, gold declined by 3.05% and silver by 1.6%.
The chart below presents the downward trend of gold and silver during the last couple of weeks (prices are normalized to February 23rd).
The ratio between gold and silver fell on Wednesday, and reached 50.14. During the month the ratio rose by 1.5% as gold has slightly outperformed silver. In the chart below are the changes in this ratio during the last few weeks.
ECB Rate Decision: Last month Mario Draghi left the rate unchanged at 1%; as of January, the Euro Area inflation rate slipped to an annual rate of 2.7%, while the EU unemployment rose to 10.7% and the EU GDP in the fourth quarter declined by 0.3%. This means the EU economy is still not out of the woods. The recent LTRO plan may have been among the reasons for the deprecation of the Euro during last week along with the developments in Greece. If ECB will cut rates, which doesn’t seem likely, it may trade down the Euro to US dollar and consequently affect gold and silver prices;
U.S. Unemployment Claims: initial claims edged down to 353,000 claims for the week ending on February 26th; the number of insured unemployment slipped by 2,000 to 3.402 million during the week of February 18th; the upcoming weekly update might affect the strength of the U.S. dollar;
Australian Trade Balance: last month the seasonally adjusted balance of goods and services rose from a surplus of $1,343 million in November 2011 to $1,709 million in December. The export of non-monetary gold sharply increased by $457 million (31%); if the gold exports will continue to rally, it might suggest a rise in demand for non-monetary gold (see here last report);
Chinese CPI: in January, the Chinese inflation rate edged up to an annual rate of 4.5%; this rate is close to China’s inflation target of 4% in annual terms. If the inflation will start to rise again it could induce the People Bank of China’s to take steps to slowdown the inflation; this, in turn could curb China’s economic progress; China is among the leading countries in importing gold and oil;
Forex / Gold & Silver Market – March
The Euro/U.S Dollar slightly rose on Wednesday by 0.29% to 1.3149. During the month Euro/U.S Dollar decreased by 1.32%; furthermore, the Australian dollar and Canadian dollar also slightly appreciated against the U.S. dollar by 0.27% and 0.44%, respectively. These currencies pairs are historically correlated with the changes in gold and silver prices, even though in recent weeks their linear correlation have weakened; thus the direction of the Euro and Aussie dollar during the day may affect the direction of gold and silver prices. Currently, the Euro/USD is slightly increasing.
Current Gold and Silver Prices March 8th
Gold (April 2012 delivery) is traded at $1,688.0 per t oz. a $4.1 or 0.24% increase as of 06:22*.
Silver (April 2012 delivery) is at $33.535 per t oz – a $0.05 or 0.15% decrease as of 06:22*.
Gold and Silver Daily Estimate
Yesterday, gold and silver prices bounced back from their recent downward trend of recent weeks. The situation in Greece regarding a potential default may affect the strength of the Euro, which in turn may affect the direction of gold and silver prices. Having said that, the recent news from this front is that it seems there will not be default for now. Furthermore, if ECB will keep rates unchanged, which seems likely, mainly due to all the recent drama regarding Greece then this may further help rally the Euro. Finally the U.S. jobless claims report may affect the strength of the U.S. dollar and consequently may also affect gold and silver prices.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
12:45 – ECB Press Conference and Euro Rate Decision
13:30 – Department of Labor Report – U.S. Unemployment Claims
15:30 – EIA U.S. Natural Gas Market Report
2:30 – Australian Trade Balance
3:30 – Chinese CPI
12:00 – Canada Unemployment Rate and Employment Report
13:30 –Canadian Trade Balance
13:30 –American Trade Balance
13:30 – U.S. Non-farm Employment Report
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