Gold and silver prices continue to zigzag as they moderately declined. But these metal prices remained around their anchor price levels of 1,500$ for gold and 35$ for silver. Will this no-trend mode continue? Let’s examine the news related to these precious metals for today, May 20th:
Gold and silver prices – May
Gold price moderately declined yesterday by 0.23% and reached 1,492$.
Silver price also inclined and reached on Thursday 34.93$, a 0.47% decline.
During May gold price decreased by 4.1%, while silver price declined by 28.1%.
The chart below of normalized silver and gold prices (100= May 2nd) shows the downward trend of both of these metals prices at the first week of May; since then, both these metals have leveled out.
The gold to silver ratio: As of Thursday, May 19th the ratio between gold and silver prices fell to 42.72. The ratio could be interpreted as one troy ounce (31.1 gram) of gold is worth 42. 72troy ounces of silver.
The rapid declines of silver prices, and moderate falls of gold prices, at the beginning of May were related, in part, to the strengthening of the US dollar compared to major exchange rates:
The chart below shows the strong correlation of gold and silver prices (daily percent changes) with major currencies.
During May, so far, the highest (in absolute terms) linear correlations were between AUD/USD and gold prices of 65% correlation, and between USD/CAD and silver prices of 72%.
These correlations show the intertwine relationship between the US dollar and gold and silver prices.
There is an ongoing speculation regarding the Fed’s next move in stimulating the US economy. According to Bloomberg there is speculation that the Fed won’t tighten monetary policy and this may further push demand for precious metals.
Middle East, Europe China and Japan News updates
Current Gold and Silver prices
In the European markets, major precious metals prices are traded with mixed trends:
The current gold price, short term futures (June 2011 delivery) is traded at 1,495.5 USD / t oz. a 3.1$ increase or 0.21%, as of 14.29*.
Current silver price, short term futures is at 34.735 USD / t oz – a 0.19 decline or 0.56%, as of 14.27*.
The current ratio of gold to silver prices is at 43.04.
Gold and silver prices Outlook and Analysis:
Gold and silver prices fell yesterday following rises a day earlier; this pattern consist with the market keeps these metals’ prices put and their current level.
The Market is probably continues to wait for news from the US in regards to the Fed’s next move in stimulating the US economy as the quantitative plan is about to end in June.
There are still prime concerns in regards to US economy including: the high debt US faces of over 14.32 trillion US dollar, which is nearly 98% of US’s GDP in 2010;the slow recovery of US economy; the weak US dollar.
These are some of the factors that could continue to weaken US dollar and consequentially keep gold and silver prices high or even further drive them.
In the mean time, I still speculate that gold and silver prices will fluctuate around their current price level of 1,500$ and 35$, respectively; as they did in the past couple of weeks.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
13.00 – Canadian Core CPI
For further reading (in this site):
- Weekly outlook for May 16-20
- Gold didn’t move | Silver kept on falling – weekly recap 9-13 May
- Gold and silver prices outlook May 2011 – what’s next for gold & silver?