Gold and silver prices fell again for the second straight day. Last night the French and German leaders reached an agreement over the Greek debt bailout. Today, it’s also scheduled for Ben Bernanke to give a speech; He might address the current debt ceiling talks and the future steps of the Federal Reserve.
Let’s examine the precious metals market for today, July 21st:
Gold and silver prices –July
Silver price also declined by 1.65% to $39.56.
During July, gold price increased by 6.3%, and silver price inclined by 13.6%.
The chart below shows the normalized gold and silver prices (June 30th 2011=100).
The gold to silver ratio: the ratio between gold and silver prices has had a downward trend during most of July as silver price has outperformed gold price and declined by 6.4% during July. Yesterday it rose by 1.4% on Wednesday, July 20th to 40.37.
Franco- German agreement | US debt ceiling still deadlocked
France and Germany came up to an agreement: they will allow Greece to reach a temporary default as they will buyback discounted Greek bonds; this solution is claimed to have private sector involvement as well. This news is likely to curb some of the uncertainty in the financial markets. This resolution is said to prevent the spread of European debt crisis.
Barack Obama still needs to reach an agreement with the House of Representatives by August 2nd to raise the debt ceiling otherwise the US may officially be proclaimed “default”. It’s very likely that the US will raise the debt ceiling, but in the mean time this situation brings uncertainty into the market.
US Dollar / Gold & silver prices – July update
The Euro to US dollar exchange rate rose yesterday by 0.42%, the Australian dollar to US dollar by 0.17% and US dollar to Canadian dollar fell by 1.01%.
This means the US dollar depreciated against major currencies and yet gold and silver prices declined; this finding suggests these precious metals prices were affected by other factors than the weakening of the US dollar.
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 $1,600.7 per t oz. with a $3.8 increase or 0.24% as of 10:31*.
Current silver price, short term futures is at $39.745 per t oz – a $0.187 incline or 0.47%, as of 10:31*.
The current ratio of gold to silver prices is at 40.25.
Gold and silver prices Outlook:
Gold and silver prices declined in the past couple of days with no apparent connection to the shifts in the US dollar; the French- German agreement vis-à-vis the Greek debt might bring some stability to the financial markets and curb the recent rises in the commodities market; on the other hand, the US debt ceiling talks is still a concern left unchecked that could continue to push gold and silver prices up. Perhaps today’s speech of Bernanke might also affect the financial market. In the mean time, I speculate (all things being equal) that gold price will remain near the $1,600 mark and silver price near $40 mark, at least until the debt ceiling crisis in the US will be resolved.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
15.00 – Ben Bernanke, Chairman of Fed, testifies
15:30 – EIA report about Natural gas storage
13.00 – Canadian Core CPI
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.