Gold and silver prices inclined yesterday and gained back some of the losses they had endured in the past couple of days that were stem, in part, by the recent CME margin hike on gold trading. Currently, gold and silver prices are traded with moderate changes. Today, the US GDP second quarter report for 2011will be published; Euro Area monetary development; and more importantly Bernanke will give a speech in Jackson Hole.
Let’s examine the precious metals market for today, August 26th:
Gold and silver prices –August
Gold and silver prices changed direction and rose yesterday: Gold price rose on Thursday by 0.34% to $1,763; silver price also sharply inclined by 4.06% to $40.79. During August, gold price increased by 8.1%, and silver price by 1.7%. The chart below shows the normalized gold and silver prices (July 29th 2011=100).
The ratio between gold and silver prices continues to remain around the 43-45 mark, but has a moderate downward trend in recent days; on Thursday, August 25th it reached 43.22. During August, gold price has outperformed silver price as the ratio inclined by 10.2%.
There are many who speculate what will be today on the agenda of Chairman of the Federal Reserve’s speech. If Bernanke will say or even just hint of a new quantitative easing plan it may sharply affect trading and likely to pull gold and silver prices up in the short run. The problem is that there were many who criticized the Fed’s expanding monetary policy (QE1 and QE2), its effectiveness and the effect it had on US dollar, US debt holders and major commodities prices.
S&P500 / Gold & silver prices – August update
The S&P500 index changed direction and fell on Thursday by 1.56%, and thus gained back some of the losses from last week. During August, S&P500 index fell by 10.29%. If the S&P500 index will drop today, it may help pulling up gold and silver prices.
US Treasuries / Gold & silver prices – August update
The US 10-year Treasury yields are still very low, and slightly fell yesterday; they have reached 2.23% – a 0.06 percent points drop from the previous day. During August they have fell by 0.59 percent points. If the growth in demand for U.S. Treasury bills will continue, it may further indicate that traders are pushing their funds back to safe havens.
US Dollar / Gold & silver prices – August update
The Euro to US dollar exchange rate declined again yesterday by 0.25%. During August, the Euro to US dollar exchange rate changed directions 15 times (on a daily basis). The US dollar also appreciated against other major currencies including Australian dollar and Canadian dollar. The changes in US dollar (currently) don’t seem to have much of an effect on gold and silver prices.
Current Gold and Silver prices
The precious metals prices are currently traded with mixed trend in the European markets:
Current gold price short term future (September 2011 delivery) is traded at $1,774.4 per t oz. a $11.2 or 0.64% increase as of 07:08*.
Current silver price short term future is at $40.720 per t oz – a $0.073 or 0.18% decline as of 07:07*.
The current ratio of gold to silver prices is at 43.57.
Gold and silver prices Outlook:
Gold and silver prices bounced back from their sharpest single day drop in a very long time; this sharp correction was likely prompted from the CME margin on gold trading that came into affect yesterday. This correction seems to be behind us and now gold price is slowly gaining back its value. Silver price was also dragged down probably due to its tight correlation with gold price, but silver price also bounced back. The financial markets are looking towards Bernanke’s speech today in Jackson Hole and whether he will refer to any future stimulus plans that the Fed may have in the near future. If Bernanke will deliver any news on a QE3 or other plans, it may stimulate trading and likely to pull up gold and silver prices.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
09.00 – Monetary developments in the euro area
09:30– US GDP 2Q 2011 report
15:00 – Ben Bernanke, Chairman of Fed, speaks
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