Gold and silver prices start off the week with rises as they are probably being affected by the recent disappointing U.S. labor report for the month of May. Will this trend continue? Let’s analyze the precious metals market for today, June 6th:
Gold and silver prices – June
Silver price kept on falling and declined very moderately by 0.03% to $36.19.
During June, gold price decreased by 0.3%, while silver price declined by 5.5%.
In the chart below are the normalized silver and gold prices (Jan 3rd 2011=100): it shows the rise and fall of silver prices compared with gold price; despite the rapid fall of silver price in recent weeks its still higher than gold price.
The gold to silver ratio: As of Friday, June 3rd the ratio between gold and silver prices inclined to 42.62 – the highest rate since May 24th, 2011. The ratio has been rising in the past couple of weeks, because gold price has outperformed silver price, as the later continued to decline.
The chart below shows the recent changes of this ratio since March up to June 3rd 2011.
As presented in the gold and silver prices monthly analysis post, the daily percent changes of US dollar compared with other major currencies were positively correlated with daily percent changes of gold and silver prices, mainly AUD/USD and USD/CAD.
On Friday June 3rd, the US dollar devalued compared with major currencies, probably due, in part, to the recent US Labor report, the Canadian dollar and the EURO by 0.92% and 0.47%, respectively.
The weakening of the US dollar on Friday seem to coincide with the moderate rise of gold prices and might have broken the fall of silver prices; if US dollar will continue to lose from its value, this might continue the moderate rally of gold prices.
Ben Bernanke will give a speech tomorrow about the economic outlook of the US economy. Following the recent publications of the economic indicators (PMI, Labor report GDP etc) showing the US economy isn’t recovering from its slowdown, it will be interesting to see what will Bernanke say in his speech, and whether he will tip his hand as to what is next for the Fed once the recent quantitative easing plan will end this month.
Current Gold and Silver prices
Major precious metals prices are traded with moderate rises in the European markets:
The current gold price, short term futures (July 2011 delivery) is traded at $1,545.9 per t oz. a $3.5 increase or 0.23%, as of 11:24*.
Current silver price, short term futures is at $36.88 per t oz – a $0.689 incline or 1.9%, as of 11:24*.
The current ratio of gold to silver prices is at 41.90.
Gold and silver prices Outlook and Analysis:
In recent weeks gold price was seeking direction as it continued to maintain at its current level of $1,500.
Silver price on the other hand suffered a set back in recent weeks but its currently traded up.
The U.S. labor report is only another report among other reports that indicates that the US economy is still not over its recession; the upcoming speech by Bernanke might indicate what’s the next move of the Fed, which is likely to drive US dollar’s value down and if so, might push back gold and silver prices back up,
In the mean time, this is just speculation and the market doesn’t seem to know what the direction of gold is and silver prices will be in the near future. Therefore, I still think that 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 – Canadian Building Permits
15:00 – Canadian Ivey PMI
5:30 – Reserve Bank of Australia – rate statements
14:00 – Ben Bernanke, Chairman of Fed, speaks
For further reading (in this site):
- Gold and silver prices outlook for June 2011
- Weekly outlook for June 6 – 10
- Gold and Silver seeking direction – weekly recap 31 May- 3 June