Gold and silver prices started the week with rises as the talks over raising the US debt ceiling reached a stalemate over the weakened. Today, the Governor of the Reserve Bank of Australia will give a speech.
Let’s examine the precious metals market for today, July 25th:
Gold and silver prices –July
Gold price bounced back and rose on Friday July 22nd by 0.91% to $1,601.
Silver price also inclined by 3.02% to $40.12.
During July, gold price increased by 6.6%, and silver price inclined by 15.2%.
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 continued to drop due to the sharper gains of silver price over gold price. During July silver price has outperformed gold price as the ratio fell by 7.5%. On Friday, July 22nd the ratio fell by 2% to 39.92.
US debt ceiling – still a stalemate following weekend talks
The weekend ended with no resolution or agreement between Republicans and President Obama over changing the Federal law to raise the US debt ceiling. The deadline before US is expected to default on its loans is scheduled to August 2nd; therefore, the parties have until then to reach an agreement by raising the debt ceiling, which is currently at its cap of $14.3 trillion. The major rating agencies including Moody’s Investors Service, Standard & Poor’s and Fitch Ratings claimed that even if US will reach an agreement to raise the debt ceiling in due time, it doesn’t guarantee they won’t downgrade US’s AAA credit rating; if US won’t raise the debt ceiling by August 2nd, they said they will cut US’s rating. This news will continue to occupy the financial market and may affect not only the US dollar but also the US financial markets: despite the recent news that the U.S. Treasuries longer-term notes holdings by other countries inclined during May 2011, this upward trend might shift direction in the following months as U.S. Treasuries longer-term notes will become riskier than before; the S&P500 also didn’t perform well during July as seen in the chart below, and gold and silver prices have substantially outperformed the S&P500 index.
US Dollar / Gold & silver prices – July update
The Euro to US dollar exchange rate finished the week with a moderate drop of 0.45%, and during July this exchange rate fell by 1%; on the other hand, during July (UTD) the US dollar depreciated against the Australian dollar by 1.2% and Canadian dollar by 1.6%.
In the next few days we might continue to see the US dollar depreciating against major currencies due to the debate over the US debt ceiling talks; this might help push gold and silver prices up, even though during last week US dollar depreciated, but gold and silver prices declined during most of the week.
Current Gold and Silver prices
The precious metals prices are currently traded with up in the European markets:
The current gold price short term future (August 2011 delivery) is traded at $1,617.0 per t oz. a $15.5 increase or 0.97% as of 08:32*.
Current silver price, short term futures is at $40.515 per t oz – a $0.393 incline or 0.98%, as of 08:33*.
The current ratio of gold to silver prices is at 39.91.
(* GMT)
Gold and silver prices Outlook:
Gold and silver prices started the week with rises and thus continue the upward trend of recent weeks. If the US debt ceiling talks won’t result in an agreement this might weaken the US dollar, and drive investors to commodities mainly precious metals; this might further drive up gold and silver prices in the following days.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Today
4.05 – Reserve Bank of Australia – Governor Stevens talks
Tomorrow
15.00 – US consumer confidence
15:00 – U.S. new home sales
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Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.