Gold and silver prices started off June with mixed trend as gold moderately inclined and silver prices declined; currently gold and silver prices are traded down ; will this trend last? Let’s analyze the precious metals market for today, June 2nd:
Gold and silver prices – June
Gold price inclined yesterday by 0.42% and thus continues its unclear trend in the past couple of weeks; it reached by the end of yesterday’s business day $1,543.
Silver price on the other hand, declined by 1.6% to $37.69.
During May, gold price decreased by 1.2%, while silver price declined by 22.1%.
The chart below presents the normalized silver and gold prices (May 2nd 2011=100): it shows the rapid fall of silver and gold at the beginning of May and the no clear path in silver and gold prices during the past couple of weeks.
The gold to silver ratio: As of Wednesday, June 1st the ratio between gold and silver prices inclined to 40.94 – since the beginning of May this ratio inclined by 21.2%, but during last couple of weeks this ratio dropped by 7.4%, i.e. silver has outperformed gold during last couple of week.
The chart below shows that this ratio had a downward trend during most of the first four months of 2011; during the first couple of weeks in May this ratio inclined but in the last couple of weeks this ratio fell. This ratio demonstrates the shifts in direction of silver price compared with gold prices during 2011.
US Dollar and Gold and silver prices – June
As presented in the recent monthly analysis report on gold and silver prices for May, the daily percent changes of US dollar compared with other major currencies are positively correlated with daily percent changes of crude oil prices, mainly AUD/USD and USD/CAD.
Yesterday, the US dollar strengthened against the Canadian dollar and the AUD by 0.92% and 0.53%, respectively.
This change coincides with the decline in silver prices yesterday, but not with the moderate rise of gold prices.
If the US dollar will continue to strengthen against these currencies, this might further weaken gold and silver prices.
US and Europe
Labor report – tomorrow the U.S. labor report will be published and is likely to show a moderate drop in payroll employment growth compared with the growth in job in April. According to Bloomberg, there are expectations that the payroll inclined by 185,000 which is lower than the rise in April.
This report indicates the economic progress of the U.S. economy, and the news of this report might affect the US dollar and consequentially major commodities prices including gold and silver prices.
There are still growing concerns over the debt in Greece and Portugal that might weaken the EURO and raise the level of uncertainty in Europe’s economy. This news is among the reasons for the weakening of the EURO during the first couple of weeks. If the EURO will keep on falling, this might push gold and silver prices down as it did during May.
Current Gold and Silver prices
Major precious metals prices are traded with moderate falls in the European markets:
The current gold price, short term futures (July 2011 delivery) is traded at $1,541.7 per t oz. a $1.5 decrease or 0.10%, as of 10.47*.
Current silver price, short term futures is at $37.180 per t oz – a $0.514 decline or 1.36%, as of 10.46*.
The current ratio of gold to silver prices is at 41.46.
Gold and silver prices Outlook and Analysis:
Gold price keeps on seeking a direction as it continues to maintain at its current level of $1,500.
Silver price that suffered its sharpest fall in 2011at the beginning of May is likely to continue its rally at a moderate rate, as long as the US dollar won’t strengthen against major other currencies.
The recent bullish recommendations of Goldman Sachs and JP Morgan during last week might have contributed to the gains of gold and silver along with the weakening of the US dollar.
I speculate gold and silver prices will maintain their current price level until a new development will occur in the financial markets such as a news stimulus plan of the Fed that will further weaken the US dollar.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
13.30 – Department of Labor report – US unemployment claims
15.30 – EIA report about Natural gas storage
15.30 – EIA report about Crude oil inventories
13.30 – US unemployment rate report & non-farm employment change
15.00 – U.S. ISM Non-Manufacturing PMI
For further reading (in this site):
- Gold and silver prices outlook for June 2011
- Weekly outlook for May 23-27
- Gold and Silver ended the week rising – weekly recap 16-20 May
- Gold and silver prices outlook May 2011