Gold price rose again yesterday, while silver price broke formation and declined; currently both precious metals’ prices are dropping as the Euro further weakens. Today, the Canadian and American trade balance will be published along with July’s OPEC report.
Let’s examine the news of the day related to the precious metals market for today July 12th:
Gold and silver prices –July
Gold price inclined on Monday, July 11th by 0.49% to $1,549 – its highest price level since June 22nd. Gold price rose for five consecutive days.
Silver price on the other hand declined by 2.31% to $35.70.
During July, gold price increased by 3.1%, and silver price inclined by 2.5%.
The chart below shows the normalized gold and silver prices (June 30th 2011=100). It shows that gold and silver prices started July with falls, then they have inclined, and currently they are both above their initial price level from the beginning of the month.
The gold to silver ratio: As of Monday, July 11th the ratio between gold and silver prices was still around the 42-43 mark as it rose to 43.40; during July this ratio inclined by only 0.6%, which means that during July (up to now) silver and gold prices nearly didn’t change compared with their price level at the end of June.
Despite the different percent changes during July of gold price and silver price, their daily percent changes are still highly correlated throughout July.
Euro to US Dollar / Gold & silver prices – July update
The Euro to US dollar exchange rate fell during July by 3.25%; During June, the EURO to US dollar exchange rate was highly positively correlated with the daily percent changes of gold and silver prices.
These findings might suggest that as the Euro keeps on falling, probably due to concerns over the recent waiver of ECB on collateral rules for Portugal and the Greece bailout news, gold and silver prices will eventually be affected by these falls and will soon follow and decline.
American and Canadian trade balance
Today, the American and Canadian trade balance reports will be published; if they will be positive and show a drop in deficit, it may further strengthen the Canadian dollar and US dollar compared to other currencies which may affect gold and silver prices.
In the last American trade balance report regarding April, the goods deficit declined to $58.1 billion; the service surplus rose to $14.4 billion; as a result, the goods and services deficit declined $43.7 billion
On the other hand in the previous April Canadian report, exports declined by 1.9%, and imports fell by 0.6%; as a result, the trade deficit widen to $924 million in April.
Current Gold and Silver prices
The precious metals prices are currently traded down in the European markets:
The current gold price, short term futures (August 2011 delivery) is traded at $1,545.6 per t oz. with a $3.6 decrease or 0.23% as of 10:37*.
Current silver price, short term futures is at $35.205 per t oz – a $0.493 decline or 1.38%, as of 10:38*.
The current ratio of gold to silver prices is at 43.90.
Gold and silver prices Outlook:
Gold and silver prices started the day with moderate falls, after gold price rose for five consecutive days. The weak Euro causes the US dollar to strengthen, and is probably among the reasons gold and silver prices are currently traded down. As the day will progress if the Euro will continue to drop, it’s likely that gold and silver prices will continue to drop as well.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Tentative –OPEC monthly report
13.30 –Canadian Trade balance
13.30 –American Trade balance
Tentative –IEA monthly oil report
02.00 –China second quarter GDP
10.00 – EURO AREA industrial production report
15.00 – Ben Bernanke, Chairman of Fed, testifies
15:30 – EIA report about Crude oil inventories
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