Gold and silver prices finished the week with falls, but will these falls continue this week? Currently gold prices are traded up, let’s examine the main news and analyze the precious metals market for today, June 13th:
Gold and silver prices – June
Silver price also declined that day by 2.93% to $36.33.
During June, gold price decreased by 0.5%, while silver price declined by 5.2%.
The chart below presents the normalized gold and silver prices (May 31st 2011=100) and their changes during June.
The gold to silver ratio: As of Friday, June 10th the ratio between gold and silver prices rose to 42.10, and during June this ratio inclined by 4.9%.
The chart below shows the fluctuations of this ratio in recent months:
US Dollar and Gold and silver prices – June update
During June, there seems to be shift in the relation between the changes in US dollar and gold and silver prices:
The chart below shows the correlations between the daily percent changes of gold & silver prices and major currencies during June (up to date).
- The current correlations of gold prices with some major currencies and silver prices with some major currencies aren’t in sync as they usually were in previous months;
- The correlations are smaller (in absolute terms) compared with the correlations in previous months.
As a comparison, the chart below shows the correlations of gold and silver prices with major currencies during May.
These findings might be just a matter of a small sample that will change direction as June will progress; however, if these findings will prove to have some merit, they might indicate that gold and silver prices are pushed in different directions and their relations with major currencies are weaker than they were during May.
The only exchange rate that still shows gold and silver prices are in sync with is the Australian dollar to USD.
Concerns over economic slowdown – Europe, U.S. and China
The major news sites continue to bring peril like news headlines regarding the economic progress of the major economies:
According to Bloomberg, the concerns over the European debt crisis mainly the restructuring of the Greek debt is among the main concerns that could affect gold and silver traders.
It’s also reported that European Central Bank President Jean-Claude Trichet will not accept the participations of ECB in second bailout for Greece. There is a conference today in which Trichet will speak about the Euro economy and might give some further answers on the Greek debt.
U.S. economy continues to show a slowdown; following the disappointing U.S. labor report from last week, there are additional economic indicators to be published this week and may show a slowdown: According to Bloomberg U.S. advance retail sales are expected to fall by 0.5%, after they rose by 0.5% in April. This might further push down US dollar and consequently raise gold and silver prices.
China is also having its own problems and there may be a slowdown in its economic progress: its industrial production growth may have slowed down to 13.1% during May compared with 13.4% during April.
Tonight, the Chinese CPI will be published; the expectations are that the CPI will grow from 5.3% in the previous month to 5.5%. If this will be the case, China might consider taking further steps to curb the rising inflation. China is among the leading countries in importing gold and silver; this slowdown might curb the growth of demand for precious metals.
Current Gold and Silver prices
The precious metals prices are currently traded with mixed trends in the Asian markets:
The current gold price, short term futures (July 2011 delivery) is traded at $1,531 per t oz. a $1.8 rise or 0.12%, as of 07:55*.
Current silver price, short term futures is at $35.935 per t oz – a $0.392 decline or 1.08%, as of 07:54*.
The current ratio of gold to silver prices is at 42.60.
Gold and silver prices Outlook and Analysis:
Gold and silver prices didn’t change much during last week, following the rapid falls, mainly of silver prices, at the first couple of days in June.
In the mid term I think that gold and silver prices will start to pick up again, but this climb will take time and will require some breaking news from the U.S. (e.g. an additional stimulus plan by Federal Reserve) to jumpstart the gains of gold and silver prices.
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 and tomorrow (all times GMT):
15.00 – ECB conference Trichet speaks
3.00 – Chinese CPI
Tentative – Bank of Japan – rate decision and monetary policy statement
13.30 – U.S. producer price index news
For further reading (in this site):