Gold price continues its rally as it rose for six consecutive days; gold and silver prices are currently traded up on the weak US dollar . Today, the Chairman of the Fed will testify, the Eurostat will publish the Euro Area industrial production report and China will present its GDP for second quarter.
Let’s examine the news of the day related to the precious metals market for today July 13th:
Gold and silver prices –July
Gold price inclined on Tuesday, July 12th by 0.85% to $1,562 – its highest price level in 2011. Gold price rose for six consecutive days.
Silver price on the other hand declined again by 0.18% to $35.63.
During July, gold price increased by 4%, and silver price inclined by 2.3%.
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 Tuesday, July 12th the ratio between gold and silver prices remains around the 43 mark as it rose to 43.84; during July this ratio inclined by only 1.6%, which means that during July (up to now) gold price moderately outperformed silver price.
China, Euro zone and US economy
Today, China will publish its quarterly report 2011; due to the recent raises in the interest rate and loans restrictions by the People Bank of China, this might have also slowed down in the economic growth rate of China during the second quarter. This report could affect the changes in the commodities markets.
The Euro Stat will publish its monthly report on the industrial production progress in the Euro Area during May; in the April 2011, the IP grew by 0.2% in the Euro Area and 0.1% in the EU27 compared with March’s; in annual terms, during April the industrial production inclined by 5.2% in (Y-2-Y) in the Euro Area and 4.7% in the EU27.
Ben Bernanke will testify before the US senate today. Following Bernanke’s recent press conference in which he said there won’t be a new QE3 (for now), it will be interesting to see if he might hint of a new stimulus plan considering the recent dissipating US labor report.
Euro, US Dollar / Gold & silver prices – July update
The Euro to US dollar exchange rate fell during July by 3.6%; During June, the EURO to US dollar exchange rate was highly positively correlated with the daily percent changes of gold and silver prices. But this isn’t the case as the EURO/USD and gold price (daily percent changes) are currently negatively correlated. The last time there was such a shift in the relation between EURO/USD and gold price was back in April 2011 when gold and silver prices rose very sharply. On the other hand, CAD/USD continues to be correlated in the same direction as in June. As the US dollar depreciated against the Canadian dollar by 0.3%, this may be among the factors to affect the strength of gold price.
Current Gold and Silver prices
The precious metals prices are currently traded up in the European markets:
The current gold price, short term futures (August 2011 delivery) is traded at $1,572.3 per t oz. with a $10 increase or 0.64% as of 11:35*.
Current silver price, short term futures is at $36.65 per t oz – a $1.016 incline or 2.85%, as of 10:37*.
The current ratio of gold to silver prices is at 42.89.
Gold and silver prices Outlook:
Gold price is currently experiencing its longest rally in recent months, after it has been falling in the past couple of months. This shift in direction might continue if the US economy will continue to show a slow down on the one hand, and Euro zone’s risk premium will keep on rising due to the recent bailouts. This might explain why in recent week not only the Euro to US dollar declined, but also the US dollar depreciated against other gold and silver related currencies including Canadian dollar.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
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
13.30 – U.S. producer price index news
13:30 – Department of Labor report – U.S. unemployment claims
15:30 – EIA report about Natural gas storage
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