Gold and silver prices declined yesterday, but will this recent drop continue towards the remainder of the week. The upcoming ECB rate decision will be made out today; will it have an affect on gold and silver? Let’s review the precious metals market for today, June 9th:
Gold and silver prices – June
Gold price ended June 8th with a 0.34% fall as it reached $1,538. This was the second straight decline this week.
Silver price also declined yesterday by 1.15% to $36.62.
During June, gold price increased by 0.1%, while silver price declined by 4.4%.
In the chart below are the normalized silver and gold prices (May 31st 2011=100) and their changes during June.
The gold to silver ratio: As of Wednesday, June 8th the ratio between gold and silver prices rose to 42.02, and during June, this ratio inclined by 4.7%.
This ratio rose during most of May as silver price fell very sharply compared with gold price. In recent weeks this ratio remained around the 40 to 42 mark.
US Dollar and Gold and silver prices – June update
On Wednesday June 8th, the US dollar appreciated against major currencies including Euro and Canadian dollar and Australian dollar by 0.74%, 0.49% and 0.92%, respectively.
The recent rally of the US dollar might have been one the factors to affect the drop of gold and silver prices yesterday.
But since these changes are very moderate in the forex and commodities markets, it’s hard to correlate these prices fluctuations with each other. Once there will be a sharp direction shift in forex markets and commodities markets or both, it will be easier to link a cause and affect relationships.
ECB conference and rate decision
In the upcoming European Central Bank press conference today, Jean Claude Trichet, President of the ECB, will refer to the progress of the European Union’s economy, ECB’s monetary policy and will probably refer to the debt restructuring of Greece. In a recent news items it was suggested that Trichet is for taking measures to encourage investors to buy New Greek bonds and replace the old ones.
The ECB will also decide on its rate which is currently at 1.25%; if ECB will decide to raise it, this move could strengthen the Euro and might also affect major commodities prices such as gold and silver prices and further push them up.
Current Gold and Silver prices
The precious metals prices are currently traded with moderate changes in the European markets:
The current gold price, short term futures (July 2011 delivery) is traded at $1,535.3 per t oz. a $3.4 drop or 0.22%, as of 11:23*.
Current silver price, short term futures is at $36.995 per t oz – a $0.375 incline or 0.375%, as of 11:23*.
The current ratio of gold to silver prices is at 42.10.
Gold and silver prices Outlook and Analysis:
The decline in gold price in the past couple of days doesn’t sum up to much of a fall. There is still no clear direction for gold and silver prices in the short term, and they may continue to dwindle until there will be some news that will stir up the financial markets.
The upcoming ECB rate decision might affect the Euros to USD exchange rate, but its affect on gold and silver prices might be to a lesser extent.
In the mean time, I still speculate that in the short term 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):
13:30 –Canadian Trade balance
13.30 – Report on American Trade balance
13.30 – ECB conference rate decision
13.30 – Department of Labor report – U.S. unemployment claims
15.30 – EIA report about Natural gas storage
Chinese Trade Balance report
12:00 – Canada unemployment rate and employment report
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