Gold and silver prices fell yesterday, but they are currently traded up. The news around the Greek debt crisis continues to occupy the news cycle as the Greek parliament will vote today on the budget cuts proposed by the Prime Minster.
Let’s examine the news of the day related to the precious metals market for today June 28th:
Gold and silver prices – June
Gold price declined on Monday, June 27th for the third straight business day, by 0.3% to $1,496.
Silver price also declined on Monday by 3.04% to $33.6.
During June, gold price decreased by 2.6%, and silver price declined by 12.3%.
The chart below shows the normalized gold and silver prices (January 3rd 2011=100).
The chart shows that despite the sharp falls in silver price in recent months it’s still above the price level at the beginning of the year; the chart also shows that silver price, on a yearly scale is still moderately above the normalized gold price.
The gold to silver ratio: As of Monday, June 28th the ratio between gold and silver prices rose to 44.54; during June this ratio augmented by 11%, which means that during June gold price has outperformed silver price.
US Dollar and Gold and silver prices – June update
There is an expected vote today in the Greek parliament to approve the major budget cuts proposed by Greece’s Prime Minister George Papandreou. Failure to pass this vote could result in the European Union not approving the recent bailout funds Greece needs to avoid default of its loans.
This news will continue to stir up the financial markets and affect the major currencies mainly the Euros to US dollar exchange rates. Up to now, gold and silver prices declined during June as did other major indexes including crude oil prices and S&P500. It seems that the uncertainty around the Greek debt should have, if any, raise demand for gold and silver, and result in higher gold and silver prices. Therefore, this could mean that the news around the Greek debt crisis had little effect on gold and silver prices.
One of the major exchange rates that demonstrated strong correlation with gold and silver prices in the past was Australian dollar to USD. As seen below, during June the linear correlation was still positive but weaker than during May.
Nevertheless, the depreciation of AUD against the USD during June by 2.1% might have more to do with the decline of gold and silver prices than the direct link between Greece’s debt news and bullion metals prices.
Current Gold and Silver prices
The precious metals prices are currently traded with moderate falls in the Asian markets:
The current gold price, short term futures (July 2011 delivery) is traded at $1,498.7 per t oz. with a $2.3 increase or 0.15% as of 07:55*.
Current silver price, short term futures is at $33.78 per t oz – a $0.183 increase or 2.29%, as of 07:55*.
The current ratio of gold to silver prices is at 44.34.
(* GMT)
Gold and silver prices Outlook:
Gold and silver prices showed weakness in the last several days, but are currently traded up. The weakness of gold and silver might have something to do with the strengthening of the US dollar against major currencies and slowdown in the big economies that usually import gold and silver including Japan and China.
I still speculate that in the mid term gold will remain near the $1,500 mark and silver price might level out at $30-35 mark.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Today
15:00 – US consumer confidence
Tomorrow
13.00 – Canadian Core CPI
15:00 – U.S. pending home sales
15:30 – EIA report about Crude oil inventories
For further reading: