Gold & Silver Prices – Daily Outlook 8 July

Gold and silver prices continued their rally for the third straight day, and they are currently traded up; this rise is despite the recent news of ECB’s rate decision from yesterday to raise its interest rate to 1.5%.. Today, the U.S. labor report was published and showed very little improvement, how, if any, will it affect the bullion metals market?

Let’s examine the news of the day related to the precious metals market for today July 8th:

 Gold and silver prices – June/July

 

Gold price inclined on Thursday, July 7th by 0.09% to $1,530 – its highest price level since June 22nd.

Silver price also inclined yesterday by 1.51% to $36.46 – the highest price also since June 22nd.

During July, gold price increased by 1.8%, and silver price inclined by 3.1%.

The chart below shows the normalized gold and silver prices (May 31st 2011=100). It shows that gold price is very close to its price level back in the end of May; silver price is climbing very sharply in recent days, but is still well below its price level back in May 31st.

 Gold prices forecast & silver price outlook 2011 JULY 8

The gold to silver ratio: As of Thursday, July 7th the ratio between gold and silver prices is staring to fall in last few day, but is still around the 42-43 mark as it fell to 41.98; during July this ratio declined by 2.7%, which means that during July (up to now) silver price has outperformed gold price.

 

Gold prices forecast & silver price outlook ratio 2011 JULY 8

 US Labor report

The US labor report didn’t show much improvement and the number of non-farm employees increased during June by only 18,000. The rate of unemployment remained nearly unchanged at 9.2%.

Historically, this news had a negative effect on gold and silver prices (as the employment inclined, gold and silver prices fell), but this was mostly due to a currency effect (US dollar).

 ECB rate decision

Following yesterday’s decision of the Trichet – President of the European Central Bank to raise the ECB rate by 0.25 percent points to 1.5%, the market didn’t react much to the news as the Euros to US dollar only moderately inclined (see here for more on the ECB rate decision analysis).  Historically, this decision had a moderate lagged negative effect on gold price even when controlling for the effect this news had on US dollar; i.e. as the ECB rate rises, gold price falls the following day; in the previous rate raise back in April 13th, gold price declined. Currently, gold price is traded down, which could be interpreted as the effect of ECB rate decision.

Current Gold and Silver prices

The precious metals prices are currently traded up in the US markets:

The current gold price, short term futures (August 2011 delivery) is traded at $1,543.3 per t oz. with a $12.7 increase or 0.836% as of 13:42*.

Current silver price, short term futures is at $36.540 per t oz – a $0.004 incline or 0.01%, as of 13:43*.

The current ratio of gold to silver prices is at 42.23.

(* GMT)

Gold and silver prices Outlook:

Gold and silver prices are likely to continue their moderate rises today, despite the ECB rate decision which should curb their rally; they are likely to moderately rise due to today’s disappointing US labor report.

 Here is a reminder of the top events and reports that are planed for today (all times GMT):

Today

12:00 – Canada unemployment rate and employment report

13.30 – US unemployment rate report & non-farm employment change

[ratings]

 For further reading:

2 comments for “Gold & Silver Prices – Daily Outlook 8 July

  1. Pradeep
    July 9, 2011 at 10:46 am

    So what to do with silver go short or long? pls reply. I am holding my short position.

    • July 9, 2011 at 11:12 am

      Hi Pradeep,

      Thanks for your comment, but I don’t provide financial advice only general market analysis. You can read my analysis and outlook of where might gold and silver be headed in July in here Gold and silver prices outlook for July 2011

      Good Luck,
      Lior

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