The last day of May starts off with moderate rises in the precious metals prices, and thus continue the upward trend of recent weeks. Let’s examine the news related to these precious metals for today, May 31st:
Gold and silver prices – May
Gold price inclined on Friday by 0.89% after it has been zigzagging during most of the week; it reached by the end of last week 1,537$.
Silver price also inclined on Friday by 1.43 to 37.86$.
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) during May: it shows the rapid fall of silver and gold at the beginning of May and the comeback of gold by the end of the month.
The gold to silver ratio: As of Friday, May 27th the ratio between gold and silver prices declined to 40.60 –level since the beginning of May this ratio inclined by 26.8%, but during last week this ratio dropped by 6.5%, i.e. silver has outperformed gold during last week by nearly 7%.
The chart below shows that this ratio changed directions during 2011 several times and during the last few days has fallen because silver prices outperformed gold prices.
During May, gold and silver prices were highly correlated with major currencies, mainly to USD/CAD, EUR/USD and AUD/USD.
The chart below shows the strong correlation of gold and silver prices (daily percent changes) to these exchange rates.
Australia and Canada are among the leading exporters of gold and silver, and the EUR/USD is the leading exchange rate in the world.
During the recent rally of silver and gold prices, last week, they inclined by 8.5% and 1.4%, respectively; the Euro to US dollar conversion rate rose by 1.9% during last week; the USD/CAD exchange rate declined by 0.2%; AUD/USD rose by 1.9%.
These figures coincide with the correlations listed above.
This might suggest that gold and silver prices’ rally in the last few days was stem, in part, by the recent weakening of US dollar compared to major currencies.
Labor report – This week the labor report will be published and will show the main changes during May in the U.S. labor market. 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 might affect the US dollar and consequentially major commodities prices such as gold and silver prices.
Current Gold and Silver prices
Major precious metals prices are traded with moderate rises in the Asian markets:
The current gold price, short term futures (June 2011 delivery) is traded at 1,538.0 USD / t oz. a 0.7$ increase or 0.05%, as of 05:54*.
Current silver price, short term futures is at 38.10 USD / t oz – a 0.237 incline or 0.63%, as of 05:54*.
The current ratio of gold to silver prices is at 40.36.
Gold and silver prices Outlook and Analysis:
Gold and silver prices zigzagged in recent weeks, but they did demonstrate an upward trend following the harsh falls during the first week of May. Silver price that suffered during the first week of May its biggest fall in 2011 has outperformed gold last week; this might continue to be the case in the weeks to come as silver price regains its value in the financial markets.
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 remain at their current price level mainly as the holiday in the US resulting in light trading in major financial markets around the world.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
10.00 – Euro Area annual inflation (May)
10.00 – Euro Area unemployment rate
14.00 – Canada overnight rate
2.30 – Australian GDP first quarter 2011
10.20 – ECB president Trichet speaks
15.30 – EIA report about Crude oil inventories
For further reading (in this site):
- 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 – what’s next for gold & silver?