Gold and silver were traded down again on Friday and thus completed a negative performing week. Will this downward trend continue this week? There are reports that following the sharp drop in gold and silver prices, the bets on rising gold price dropped to the lowest level since January 2012. Currently the prices of gold and silver are rising. Today, Australia’s Bank Policy Meeting will be held.
Here is a short outlook on gold and silver prices for Monday, March 19th:
Gold and Silver– March Update
Gold price slipped on Friday by 0.22% to $1,655.8; silver also edged down by 0.37% to $32.60. During March, gold declined by 3.25% and silver by 5.88%.
The chart below presents the recent downward trend of gold and silver during March (prices are normalized to February 29th).
The ratio between gold and silver didn’t move much and reached 50.79. During the month the ratio increased by 2.80% as silver has moderately underperformed gold. In the chart below is the upward trend of this ratio during the month.
On Today’s Agenda
Monetary Policy Meeting Australia’s Bank: The minutes of the monetary policy meeting of the reserve bank of Australia presents the main factors that affected the board’s monetary decision; this statement may affect the Australian dollar currency and consequently gold prices that is strongly linked with it;
Forex / Gold & Silver Market – March
The Euro/U.S Dollar also rallied on Friday to 1.3176. During March Euro/U.S Dollar decreased by 1.12%; further, the Australian dollar and Canadian dollar also traded up against the U.S. dollar by 0.64% and 0.02%, respectively. Since these currencies pairs are correlated with the daily changes of gold and silver prices if these currencies will appreciate against the U.S dollar it may indicate gold and silver will also rise. Currently, the Euro/USD is slightly rising.
American Stock Markets / Gold & Silver Prices – March
The S&P500 index edged up on Friday by 0.11% to 1,404.17. During the month S&P500 index traded up by 2.82%. As presented in the chart below, the S&P500 index daily changes are strongly and positively correlated with daily changes of gold and silver prices (during March the linear correlation was 0.57 with gold and 0.661 with silver), This finding suggest that if the stock market will continue to rise it may indicate that gold and silver prices may rally as well.
U.S. Treasuries / Gold & Silver Prices – March
The U.S. 10-year Treasury yield increased on Friday by 0.02 percent points to 2.31% – the highest rate since October 28th, 2011; during March the 10 year treasury yield rose by 0.33 percent point. This rally in LT securities yields may indicate that the demand for “secure investments” has subsided. During March there was a mid-strong negative correlation between the shifts in U.S. long term Treasury yield and gold price. The chart below shows the development of the U.S. 10 yr yield and gold price during the month. This char suggest that if the LT U.S. treasury yield will continue to rise, it may indicate that gold price will further drop.
Current Gold and Silver Prices March 19th
Gold (April 2012 delivery) is traded at $1,667.6 per t oz. a $11.8 or 0.71% increase as of 16:33*.
Silver (April 2012 delivery) is at $32.975 per t oz – a $0.371 or 1.14% increase as of 11:33*.
(* GMT)
Gold and Silver Daily Forecast
Precious metals prices didn’t perform well during last week and may continue to do so in this coming week. The FOMC decision to hold on any QE programs was probably one of the prime news that may continue to have lingering effect on precious metals in the weeks to come (until the Fed will say otherwise). Unless there will be an unexpected news items today regarding Iran or the Greek debt crisis that would stir up the financial markets I speculate gold and silver prices will follow the changes in the forex markets and may slightly trade down.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Today
12:30 – Monetary Policy Meeting Australia’s Bank
Tomorrow
09:30 – Great Britain CPI
13:30 – U.S. Housing Starts
13:30 – U.S. Building Permits
17:45 – Bernanke Speech
For further reading: