Gold and silver prices kept on rising yesterday despite the bounce back of the US dollar from Wednesday’s sharp falls. Today, the US consumer price index will be published.
Let’s examine the news of the day related to the precious metals market for today July 15th:
Gold and silver prices –July
Gold price inclined on Thursday, July 14th by 0.24% to $1,589 – its highest price level in 2011. Gold price rose for eighth consecutive days.
Silver price moderately inclined by 1.42% to $38.69 – the highest price level since May 4th.
During July, gold price increased by 5.5%, and silver price inclined by 9.5%.
The chart below shows the normalized gold and silver prices (Jan 3rd 2011=100). It shows that silver price is still outperforming gold price since February 2011; it also shows that up until the beginning of April, gold price didn’t rise above its initial price level of 2011 (January 3rd).
The gold to silver ratio: As of Thursday, July 14th the ratio between gold and silver prices fell again yesterday to 41.07 – its lowest level since June 1st, as silver price is starting to outperform gold price; during July this ratio declined by 4.8%.
US consumer price index
Today, the CPI report will be published, yesterday the PPI was published and showed a decrease of 0.4% during June compared to May. This is an indication that the CPI, which is strongly and positively correlated with the PPI, will probably also show a decline in June, mainly due to the drop in energy prices. This report is closely watched by the Federal Reserve; if the CPI will drop, it will ward off any worries the Fed might have had over inflation pressures due to its expanding monetary policy. This will also be one worry the Fed could rule out when considering a new stimulus plan.
Euro, US Dollar / Gold & silver prices – July update
During June, the EURO, AUD and CAD to US dollar exchange rates were highly positively correlated with the daily percent changes of gold and silver prices. The Euro to US dollar exchange rate fell during July by 2.5%, and yesterday it fell by 0.18% probably as a correction to the previous day’s sharp rises. This is probably among the reasons gold and silver prices only moderately inclined yesterday, as oppose to the sharp gains they had the day before. If today the US dollar will depreciate against major currencies including Australian dollar and Canadian dollar, this might further push gold and silver prices up.
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 $1,579.6 per t oz. with a $9.7 decrease or 0.61% as of 09:23*.
Current silver price, short term futures is at $38.05 per t oz – a $0.644 decline or 1.66%, as of 09:23*.
The current ratio of gold to silver prices is at 41.49.
Gold and silver prices Outlook:
Gold and silver prices continued yesterday to rise, but a correction will eventually occur to end this rally. If the market will continue to downplay US dollar even over the Euro, then this will likely to extend the upward trend of gold and silver prices as they may continue to moderately rise. On the other hand, the psychological factor might start to affect traders and the sharp rises of recent days in gold and silver prices might be too much too soon resulting in moderate falls. Therefore I think that gold and silver prices will moderate change today, but will likely to continue their upward trend in the following days.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
13.30 – Report on US CPI
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