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
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.
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.
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.
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):
12:00 – Canada unemployment rate and employment report
13.30 – US unemployment rate report & non-farm employment change
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