Gold and silver prices bounced back yesterday, but they still seek a direction as they did in recent weeks. Let’s review the precious metals market for today, June 10th:
Gold and silver prices – June
Silver price also inclined yesterday by 2.2% to $37.42.
During June, gold price increased by 0.4%, while silver price declined by 2.3%.
In the chart below are the normalized silver and gold prices (May 31st 2011=100) and their changes during June.
The gold to silver ratio: As of Thursday, June 9th the ratio between gold and silver prices fell to 41.22, but during June this ratio inclined by 2.7%.
This ratio rose during most of May as silver price fell very sharply compared with gold price. Nonetheless, in the last few weeks this ratio remained around the 40 to 42 mark.
On Thursday June 9th, the US dollar continued its recent rally and appreciated by 0.5% against Euro, but lost some of its value against Canadian dollar and Australian dollar by 0.64% and 0.04%, respectively.
The decline of US dollar compared with AUD and CAD – two currencies that are strongly associated with major commodities including gold and silver – might have been among the factors to assist with the recent moderate rises in gold and silver prices yesterday.
But since these changes are very moderate in the forex and commodities markets, it’s hard to correlate these prices fluctuations with each other. Once there will be a sharp direction shift in forex markets and commodities markets or both, it will be easier to link a cause and affect relationships.
Gold and silver prices and S&P500- June
During May there was a strong positive linear correlation between precious metals daily percent change and S&P500 index. This correlation, however doesn’t seem to hold up during June as the S&P500 index fell during most of June, while gold prices remained flat.
Yesterday, the S&P500 index inclined by 0.74% compared with the previous day. This change coincides with the incline of gold and silver prices.
That being said, these abovementioned correlations and relations might also be just noise, especially since these daily percent changes are very moderate. It’s easier to see a link when these indexes fluctuate by a high rate.
ECB rate decision
As expected, the European Central Bank left the rate at its current level of 1.25%, but the ECB might consider changing it in the next rate decision next month (for more on the rate decision see here).
This decision might have been among the news items that influenced traders to trade down the EURO. As a result this might further strengthen the US dollar and if so, this could weaken major commodities including gold and silver.
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 $1,541.4 per t oz. a $1.3 drop or 0.08%, as of 12:30*.
Current silver price, short term futures is at $37.375 per t oz – a $0.049 decline or 0.13%, as of 12:30*.
The current ratio of gold to silver prices is at 41.23.
Gold and silver prices Outlook and Analysis:
The recent rise in gold and silver prices don’t seem to reflect a new trend or a change in direction, just a fluctuation that reflect the no clear direction gold and silver prices have experienced in recent weeks. In the mid term I think that gold and silver will start to pick up again, but this won’t happen over night and in the meantime I still speculate that gold and silver prices will maintain their current price level until a new development will occur to stir up the financial markets.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
Chinese Trade Balance report
12:00 – Canada unemployment rate and employment report
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