Gold and silver prices continue to fall as they did in the last couple of days; some speculate this might be due to the recent news about the Greek debt bailout. Will the recent shift in direction, in which gold and silver prices are traded down, continue?
Let’s examine the news of the day related to the precious metals market for today June 27th:
Gold and silver – June
Silver price also declined on Friday by 1.05% to $34.65.
During June, gold price decreased by 2.3%, and silver price declined by 9.5%.
The chart below shows the normalized gold and silver prices (May 31st 2011=100).
The chart shows that silver price underperformed gold price during June.
The gold to silver ratio: As of Friday, June 24th the ratio between gold and silver prices continue to hover near the 43 mark; it declined on Friday to 43.32; during June this ratio increased by 8%, which means that during June gold price has outperformed silver price.
The Greek debt is still in the news and is probably among the news items that affect the Euros to US dollar exchange rate.
The chart below shows the correlations between the daily percent changes of gold & silver prices and major currencies during June (up to date).
The news about Greece’s debt is claimed to have affected gold and silver prices. In the chart above there is a mid-strong correlation with EURO/USD and gold prices (daily percent changes), but there is little relation with silver price. Furthermore, there are still mid/strong correlations among Australian dollar to USD, US dollar to Canadian dollar and gold and silver prices. This could mean that gold and silver prices are not affected in the same direction as they used to in previous months with some currencies; it could also mean that gold and silver prices remain more correlated with CAD and AUD than with EUR. Therefore, the direct link between the Greek debt news and gold and silver prices might be weaker than we think. The depreciation of CAD and AUD against the USD during June by 2.1% and 1.7%, respectively might have more to do with the decline of gold and silver prices during June than the direct link between Greece’s debt news and bullion metals prices.
Current Gold and Silver prices
The precious metals prices are currently traded down in the European markets:
The current gold price, short term futures (July 2011 delivery) is traded at $1,497.4 per t oz. with a $3.5 decrease or 0.23% as of 09:44*.
Current silver price, short term futures is at $33.855 per t oz – a $0.795 decline or 2.29%, as of 09:43*.
The current ratio of gold to silver prices is at 44.21.
Gold and silver prices Outlook:
Gold and silver prices shifted direction in the last few days and are currently traded down. The press conference last week in which Fed chairman said he doesn’t plan a new stimulus plan in the near future might be among the reasons for the sharp falls in major commodities prices including gold and silver prices.
I still think gold price will remain near the $1,500 mark in the near future as the speculation in the financial markets continue to be high around the Greek debt and the US economy’s slow recovery.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13:30 – US Core PCE price index
13:30 – US personal spending
15:00 – US consumer confidence
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