Gold and silver prices started September with light falls, but they have already changed direction and started the day rising. Yesterday, the US Treasury bill yields fell; the EURO/USD decreased again as the US PMI manufacturing index showed a growth but at a slower pace. Today, the US unemployment rate & non-farm employment report will be published (update: no increae in non-farm employment).
Let’s examine the precious metals market for today, September 2nd:
Gold and Silver Prices – September
Gold and silver prices finished yesterday with moderate falls: Gold price fell on Thursday by 0.1% to $1,831; silver price also inclined by 0.73% to $41.77. During August-September, gold price increased by 12.3%, and silver price by 4.1%. The chart below (normalized gold and silver prices (August 15th 2011=100)) shows the price development of precious metals in the past couple of weeks.
The ratio between gold and silver prices remained around 43-45; on Thursday, September 1st the ratio slightly rose to 44.04. During August-September, gold price has outperformed silver price as the ratio inclined by 8.3%.
US PMI Manufacturing slightly fell in August but still growing
According to the recent U.S. Manufacturing ISM report, the U.S. Manufacturing PMI reached 50.6% during August – a 0.3 percent points decline. This means that while the US manufacturing sector is still growing, it grows at a slower pace in August compared to July. This report is supposed to have a negative effect on gold price via the US dollar. It could have contributed to the drop in gold price yesterday.
On Today’s Agenda – U.S. non-farm employment report
In the last report (July) the number of non-farm payroll employment rose by 117 thousand people, which is nearly the rate needed to maintain the unemployment rate unchanged; update: US employment didn’t change in August. This figure is likely to further help push gold and silver prices up via the US dollar.
S&P500 / Gold & silver prices – September update
The S&P500 index changed direction and fell yesterday by 1.19. During August-September, S&P500 index fell by 6.80%. Furthermore, during August- September 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 declined today, it may help the rally of gold and silver prices throughout the day.
US Treasuries / Gold & Silver Prices – September Update
The US 10-year Treasury yields zigzagged again and finished yesterday with a 0.08 percent points drop; during August-September they have fallen by 0.67 percent points. If the demand for U.S. Treasury bills will rise and the yields will further drop, it may further indicate a change in the direction of traders.
US Dollar / Gold & Silver Prices – September Update
The Euro to US dollar exchange rate declined again for the third straight business day, yesterday by 0.77%; this ongoing appreciation of US dollar against the Euro is likely to be one of the factors for the drop in gold and silver prices yesterday. On the other hand, the US dollar depreciated against other major currencies including Australian dollar and Canadian dollar.
Current Gold and Silver prices
The precious metals prices are currently traded with up in the U.S. markets:
Current gold price short term future (October 2011 delivery) is traded at $1,874.6 per t oz. a $45.5 or 2.49% increase as of 15:01*.
Current silver price short term future is at $42.785 per t oz – a $1.253 or 3.02% incline as of 15:00*.
The current ratio of gold to silver prices is at 43.81.
(* GMT)
Gold and silver prices Outlook:
Gold and silver prices started September with light falls probably, in part, due to the ongoing appreciation of the US dollar against the Euro; the stock markets indexes traded down and US long term Treasury yields also fell yesterday; these factors are likely to contribute the rally of gold and silver prices throughout the day. The US Labor report that was published today didn’t show an improvement in the labor status even though the unemployment rate remained at 9.1%. This news is likely to further push up gold and silver prices as it shows the US economy isn’t entirely out of its slowdown and thus rekindles the debate over the chances the Fed will implement another stimulus plan . Therefore, I still think gold and silver prices will continue to rise at a slow pace.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
Today
13.30 – U.S. unemployment rate report & non-farm employment change
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Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.