Gold and silver prices are currently traded with moderate falls after they have been rising since April 13th, for eight straight business days. Will these falls continue throughout the day and signal a change in direction?
Let’s examine the news and events that might affect current gold and silver prices as of April 26th:
Gold and silver prices for April
Gold and silver prices keep their uprising as gold price is still hovering over the 1,500$ mark and silver price passed yesterday the 47$ mark. As of yesterday April 25th, silver price has risen by 25%, while gold price increased by 5.6%.
The gold to silver ratio: As of yesterday, April 25th the ratio between gold and silver prices reached a new low and reached 31.99 – This drop is mostly due to the ongoing rise of silver prices at a higher rate than gold prices. The ratio could be interpreted as one troy ounce (31.1 gram) of gold is worth 31.99 troy ounces of silver.
There is also a decline in correlation of the daily percent changes of gold and silver prices as it is at +0.75 – the lowest level since February 2011.
The Indian connection
Indian, the largest consumer of gold worldwide is likely to have a correlation between its currency and gold and silver prices.
As seen in the chart below, the correlation of the daily percent changes between gold and silver prices and USD/ INR exchange rate has been declining and the correlation of gold with USD/ INR fell from -0.49 during March to -0.16 during April 2011.
I think that this drop in correlation shows that the recent rise in gold prices is less correlated with the demand for gold in India and the strengthening of the Indian rupee against the US dollar.
Update from Middle East
According to Reuters, there are heavy fighting in Misrata between Gaddafi’s troops and the rebels’ forces.
Current Gold and Silver prices
European markets show major precious metals prices are traded with falls:
The current gold price, short term futures (May 2011 delivery) is traded at 1,505.7 USD / t oz. a 3.4$ decrease or 0.23%, as of 10.27*.
Current silver price, short term futures is at 46.145 USD / t oz – a 1.028 decline or 2.18%, as of 10.29*.
The current ratio of gold to silver prices is at 32.61.
Gold and silver prices Outlook and Analysis:
The rises of gold and silver prices that continued yesterday might slow down today and the next couple of days. This drop isn’t necessarily a shift in direction of these precious metals, but could be a correction for the rapid rises in gold and silver prices. From Macro economic perspective there was no recent news that could have affected the actual silver and gold market. The recent bullish market will likely to make a comeback soon. I speculate we will probably continue to see some falls and corrections in gold and silver prices in the next day or two, which will moderately shift back to rises by the end of the week.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
2.30 – Australian CPI for first quarter 2011
13.30 – US Department of Commerce – Report on Durable Goods
15.30 – EIA report about Crude oil inventories
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