Gold and silver prices ended with light gains on the last day of August, but they are currently traded down. According to ADP, the US labor market added 91 thousand jobs. This may further curb the speculations around QE3. Yesterday, the US Treasury bill yields rose, and the S&P500 index increased for the fourth straight business day – these indicators show that traders are regaining faith in stock market. Today, the US unemployment claims report and US’s ISM Manufacturing PMI will be published.
Let’s examine the precious metals market for today, September 1st:
Gold and Silver Prices – September
Gold and silver prices finished yesterday with light gains: Gold price rose on Wednesday by 0.1% to $1,831; silver price also inclined by 0.73% to $41.77. During August, gold price increased by 12.3%, and silver price by 4.1%. The chart below (normalized gold and silver prices (July 29th 2011=100)) shows the rally of the bullion market in the past few days.
The ratio between gold and silver prices remained around 43-45; on Wednesday, August 31st the ratio slightly fell and reached 43.85. During August, gold price has outperformed silver price as the ratio inclined by 7.8%.
ADP US labor report – employment inclined by 91 thousand
According to the recent ADP report, US employment inclined by 91,000 during August. If this trend will continue, it will at least keep the unemployment rate from rising, and perhaps even curb some of the speculations around the FOMC meeting in September and whether there will be an additional stimulus plan. The minutes of the FOMC recent meeting that was published yesterday reveled that a few members are considering implementing another stimulus plan. If there will be QE3, it may increase the risk of inflation and push more traders towards gold and silver.
On Today’s Agenda
U.S. ISM Manufacturing PMI: This report indicates the monthly change in US manufacturing sector. During last month, the index fell to 50.9%; this index might affect traders of commodities (see here my review of last report);
Weekly U.S. unemployment claims: For the week ending on August 20th, initial claims increased by 5,000 to 417,000 claims; this report could further indicate the economic progress of the US in the labor market.
S&P500 / Gold & Silver Prices – September Update
The S&P500 index continues its rally and rose for the fourth straight business day, yesterday by 0.49%, and thus completed an 8.46% rally since August 22nd. In August, S&P500 index fell by 5.68%. Furthermore, during August the S&P500 index had negative correlations with the daily percent changes of gold and silver prices; so that if the S&P500 index will continue its rally, it may curb some of the gains in gold and silver prices and perhaps even change the direction of gold and silver prices from rises to falls.
US Treasuries / Gold & Silver Prices – September Update
The US 10-year Treasury yields zigzagged again and finished yesterday with a 0.04 percent points increase; during August they have fallen by 0.52 percent points. If the demand for U.S. Treasury bills will drop and the yields will further rise, it may indicate a change in the direction of traders seeking safe haven like investments.
US Dollar / Gold & Silver Prices – September Update
The Euro to US dollar exchange rate slightly declined on the last day of August by 0.51%; during August, the Euro to US dollar exchange rate changed directions 17 times (on a daily basis). On the other hand, the US dollar depreciated against other major currencies including Australian dollar and Canadian dollar. Perhaps in September there will be a stronger relation between major exchange rates and gold and silver prices, because during August there were very weak relations between bullion prices and major exchange rates.
Current Gold and Silver Prices
The precious metals prices are currently traded with moderate falls in the European markets:
Current gold price short term future (October 2011 delivery) is traded at $1,824.3 per t oz. a $7.4 or 0.40% decrease as of 09:47*.
Current silver price short term future is at $41.60 per t oz – a $0.168 or 0.40% decline as of 09:49*.
The current ratio of gold to silver prices is at 43.85.
Gold and silver prices Outlook:
Gold and silver prices finished August on a positive note with light gains, but they may slip today as the stock market continues to build up momentum and the US Treasury bill yields are rising again. The uncertainly in the financial markets is still high especially in the first few days of a month. That being said, I still speculate that gold and silver prices will continue to increase at a slow pace even if there might be some falls along the way.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13:30 – Department of Labor report – U.S. unemployment claims
15.00 – U.S. ISM Manufacturing PMI
15:30 – EIA report about Natural gas storage
13.30 – U.S. unemployment rate report & non-farm employment change
For further reading:
- The fall and rise of gold & silver | weekly recap 22-26 August
- Weekly Outlook for August 29- 2 September
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.