Gold and silver prices fell again for the third straight day. The talks over the debt ceiling raise in the US continue with no agreement in sight. Today, the core CPI of Canada will be published.
Let’s examine the precious metals market for today, July 22nd:
Gold and silver prices –July
Silver price also declined by 1.54% to $38.95.
During July, gold price increased by 5.6%, and silver price inclined by 11.8%.
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 shifted direction again: after it fell during recent weeks, it started to pick up again due to the sharper falls of silver price over gold price. During July silver price has outperformed gold price as the ratio fell by 5.6%. Yesterday the ratio rose by 0.9% on Thursday, July 21st to 40.75.
US debt ceiling – all talks but no results
The debt ceiling talks continue with no clear end in sight; the main issue of controversy between republicans and democrats remains Obama’s demand to raise taxes, which the republicans oppose; Barack Obama needs to pass the law to allow raising the debt ceiling, which is currently at its cap of $14.3 trillion, by August 2nd otherwise the US may officially be proclaimed “default”. This might be among the reasons for the increase in the gold and silver prices on the one hand in recent weeks, and the depreciation of the US dollar against major currencies on the other (see below).
US Dollar / Gold & silver prices – July update
The Euro to US dollar exchange rate rose very sharply yesterday by 1.48%, probably stem from the Franco-German agreement on the bailout of Greece. Furthermore, the US dollar depreciated against the Australian dollar by 0.84% and Canadian dollar by 0.44%.
Despite the depreciation of the US dollar, gold and silver prices declined yesterday; this finding suggests that these precious metals prices were affected by other factors and less from the weakening of the US dollar.
Current Gold and Silver prices
The precious metals prices are currently traded with mixed trend in the European markets:
The current gold price short term future (August 2011 delivery) is traded at $1,586.5 per t oz. a $0.5 decrease or 0.03% as of 08:31*.
Current silver price, short term futures is at $39.035 per t oz – a $0.088 incline or 0.23%, as of 08:31*.
The current ratio of gold to silver prices is at 40.64.
Gold and silver prices Outlook:
Gold and silver prices declined in the past three days despite the depreciation of the US dollar; this might suggest that gold and silver prices are driven down by other factors such as the little stability that came to Europe vis-à-vis the Greek debt agreement between Germany and France. The US debt ceiling talks is still a concern left unchecked that might push gold and silver prices up in the following days.
Here is a reminder of the top events and reports that are planed for today (all times GMT):
13.00 – Canadian Core CPI
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.