Gold and silver prices finished the week with rises, but they are off to a slow start today. The concerns over the European debt crisis (Greece) will be among the main topics of the day that could affect the financial markets, but will it also affect gold and silver prices? Let’s examine the news of the day and analyze the precious metals market for June 20th:
Gold and silver prices – June
Gold price finished the week rising by 0.6% to $1,539.
Silver price also inclined on Friday, June 17th by 0.53% to $35.75.
During June, gold price increased by 0.1%, and silver price declined by 6.7%.
The chart below shows the normalized gold and silver prices (May 31st 2011=100).
The gold to silver ratio: As of Friday, June 17th the ratio between gold and silver prices remained nearly unchanged at 43.05, as was the case during last week; during June this ratio inclined by 7.3%.
The chart below shows the fluctuations of this ratio in recent months:
The stability of the ratio in recent days may also indicate the slowdown in the daily changes in gold and silver prices.
The Euros to US dollar and crude oil prices
The ongoing concerns in Europe in regards to the Greek debt will probably among the factors for the sharp shifts in Euro/USD exchange rate, however will these changes also affect the robustness of gold and silver prices, it will remain to be seen; currently there is little evidence to support this claim.
There even those who suggest that the demand for gold by banks have recently inclined.
The Greek debt will be the main talk of the day in the Economic and Financial Affairs Council. Greece expects to receive from the IMF and The EU nearly $16 billion in order to ward off near default status.
During May, there was a strong linear correlation among Euros to US dollar, AUD/USD and USD/CAD exchange rates and gold and silver prices. During June, however there is little evidence to support this relation among these currencies and gold and silver prices as presented below for the AUD/USD exchange rate:
This finding only goes to show that the relations between currencies and gold and silver are reliable; it also shows that gold and silver weren’t affected by the recent changes in US dollar compared with other currencies. This might also indicate that the demand for gold and silver will remain high as they further inclined last week despite the appreciation of US dollar.
Current Gold and Silver prices
The precious metals prices are currently traded with little changes in the Asian markets:
The current gold price, short term futures (July 2011 delivery) is traded at $1,538.3 per t oz. with a $0.8 drop or 0.05% as of 06:51*.
Current silver price, short term futures is at $35.66 per t oz – a $0.088 decline or 0.25%, as of 06:51*.
The current ratio of gold to silver prices is at 43.13.
(* GMT)
Gold and silver prices Outlook and Analysis:
Gold and silver prices remain at their current price level as they did in the past couple of weeks.
The uncertainty in Europe around the debt crisis, may cause a rise in demand for US dollar based investments and also keep the demand for gold and silver high robust.
I still think that in the mid term gold and silver prices will start to pick up, once there will be some breaking news from the U.S. (e.g. an additional stimulus plan by Federal Reserve).
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):
Today
All day – European council summit
Tomorrow
2:30 – Monetary Policy meeting Australia’s Bank
13:30 – Core retails sales Canada (April 2011)
15:00 – U.S. existing home sales
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