Gold and silver prices continue the upward trend and inclined yesterday for the second straight business days. The U.S. debt ceiling talks continue to be one of the prime concerns of the financial market. Today, the U.S. consumer confidence report will be published along with the U.S. new home sales.
Let’s examine the precious metals market for today, July 26th:
Gold and silver prices –July
Gold price bounced back and rose on Monday July 25th by 0.81% to $1,614. This is the highest price level in 2011 so far.
Silver price also inclined by 0.6% to $40.36 – the highest price level since May 3rd, 2011.
During July, gold price increased by 7.4%, and silver price inclined by 15.9%.
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 changed direction again and slightly inclined yesterday, July 25th by 0.2% to 40. During July silver price has outperformed gold price as the ratio fell by 7.3%.
The standard deviations of the daily percent changes of gold and silver prices are higher during July compared with June’s, but lower than May’s.
Australia’s Governor – voiced concerns over household spending
Yesterday, the Governor of Reserve Bank of Australia gave a speech titled the Cautious Consumer; in it, he voiced his concern over the moderate growth rate of the household consumption compared to the growth of the income in the past five years. One of the reasons for the slowdown in the growth in consumption is related to the strengthening of the Australian dollar in recent years.
US debt ceiling – still a stalemate
The current situation is that President Obama is calling trying to pressure the American public to pressure public officials (Republicans) to work towards raising the US debt ceiling, which is currently at its cap of $14.3 trillion. The deadline before the US is expected to default on its debt is August 2nd.
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.
US Dollar / Gold & silver prices – July update
The Euro to US dollar exchange rate didn’t change much yesterday and very moderately inclined by 0.13%; during July this exchange rate fell by 0.9%.
In the next few days we might continue to see the US dollar depreciating against major currencies due to the concerns over the US debt ceiling; this might help push gold and silver prices up, even though there is weaker correlation between US dollar and gold and silver prices in July compared to previous months.
Current Gold and Silver prices
The precious metals prices are currently traded up in the Asian markets:
The current gold price short term future (August 2011 delivery) is traded at $1,616.5 per t oz. a $2.1 increase or 0.13% as of 07:58*.
Current silver price, short term futures is at $40.530 per t oz – a $0.169 incline or 0.42%, as of 07:57*.
The current ratio of gold to silver prices is at 39.87.
Gold and silver prices Outlook:
Gold and silver prices renewed yesterday its upward trend that they have experienced during most of July. If the US debt ceiling talks won’t resolve in the next few days, this might further weaken the US dollar, and drive investors to commodities mainly precious metals; consequently, 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):
15.00 – U.S. consumer confidence
15:00 – U.S. new home sales
09.00 – Monetary developments in the euro area
13:30 – US Department of Commerce – Report on Durable Goods
15:30 – EIA report about Crude oil inventories
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.