Gold and silver prices continue to zigzag with no clear trend as they have bounced back with moderate rises following a drop in prices on Monday. The US’s CPI will be published today, along with the TIC that might affect traders’ perspective on the financial markets. Let’s examine the news of the day and analyze the precious metals market for June 15th:
Gold and silver prices – June
Silver price also inclined by 1.94% to $35.41.
During June, gold price decreased by 0.8%, while silver price declined by 7.6%.
The chart below shows the normalized gold and silver prices (May 31st 2011=100).
Both gold and silver prices are still below their initial price level from the beginning of June, but silver price fell much more precipitately than gold price did; this was also the case during May.
The gold to silver ratio: As of Tuesday, June 14th the ratio between gold and silver prices declined to 43.05, but during June this ratio inclined by 7.3%.
The chart below shows the fluctuations of this ratio in recent months:
As seen in the chart below, the correlations among gold & silver prices and WTI crude oil price are still positive strong, which implies that they are still in sync even though their correlations are less strong than they were back in May.
S&P500 and gold & silver prices
During May there were strong positive linear correlations among precious metals daily percent changes and S&P500 index. These correlations, however don’t seem to hold up during June between gold price and S&P500 index, as gold price didn’t decline as the S&P500 index did. On the other hand, silver price still seem to be correlated with the S&P500 index as both these indexes fell sharply during June.
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.
US Consumer price index
Following yesterday’s report on the US PPI in which the May PPI inclined by 0.2% compared with April, today the Consumer price index will be published. The expectations are that the CPI will incline by a similar rate to the PPI, i.e. by 0.2%. In the last report, the US inflation increased by 0.4% for April. This news could cause the US dollar to depreciate against major currencies and consequently might drive gold and silver prices further up.
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 $1,522.6 per t oz. a $1.8 decline or 0.12%, as of 08:30*.
Current silver price, short term futures is at $35.230 per t oz – a $0.181 decline or 0.51%, as of 08:31*.
The current ratio of gold to silver prices is at 43.21.
Gold and silver prices Outlook and Analysis:
Gold and silver prices continue to zigzag as they did in the past couple of weeks.
I still speculate that in the mid term gold and silver prices will rise, and will commence once there will be some breaking news from the U.S. (e.g. an additional stimulus plan by Federal Reserve).
The news from US listed above, could contribute to the gains of gold and silver prices as they may push down US dollar.
In the meantime it seems that gold and silver prices will moderately change, but will remain near their current price level.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13:30 – US Core CPI and CPI
14:00 – TIC Purchases for April 2011
15:30 – EIA report about Crude oil inventories
10:00 – Euro Area CPI and core monthly inflation (May)
13.30 – U.S. Building Permits
13.30 – Department of Labor report – U.S. unemployment claims
15.30 – EIA report about Natural gas storage
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