Gold and silver prices are currently traded with rises for the second straight day. Will these rises continue throughout the week? Let’s examine the precious metal market for May 10th:
Gold and silver prices – May
During May, gold price decreased by 3.4%, while silver price declined by 23.6%. Notice in the chart below, in normalized terms (100= May 2nd) silver and gold prices are still traded very low compared to their initial price level they started at the beginning of May.
Silver price also bounced back and reached yesterday 37.12$ a rise of 5.18%.
The gold to silver ratio: As of yesterday, May 9th the ratio between gold and silver prices fell to 40.50. The ratio could be interpreted as one troy ounce (31.1 gram) of gold is worth 40.50 troy ounces of silver.
The gold to silver ratio rose very rapidly by over 26.5% during May. This shift in trend is the first one in 2011.
The effect of exchange rates on precious metals
During last week, silver and gold prices fell rapidly, in part, due to the appreciation of the US dollar compared to major.
In the weeks to come the high volatility in Euro/US dollar exchange rate may affect other exchange rates and consequentially the gold and silver prices:
(From the Euro side)
- The concerns around the debt crisis in Europe especially Greece, Ireland Portugal;
- The change in policy direction of ECB as Jean-Claude Trichet didn’t raise the interest rate of ECB and the rate remained at 1.25% in an attempt to keep the US dollar strong;
(From the US dollar)
- The speculation around the next move the Federal Reserve will do after the quantitative easing plan will end in June;
- The stronger than expected U.S. employment report of April.
These factors might continue to affect gold and silver prices and as these currencies will fluctuate (mainly the US dollar) it may affect gold and silver prices as well.
Update from Middle East
NATO continues to bomb Libya’s capital – Tripoli; also the rebels have managed to take control of the west coast road of city of Misrata where Gaddafi’s forces controlled in the past couple of months.
Current Gold and Silver prices
European markets show major precious metals prices are traded at rises:
The current gold price, short term futures (June 2011 delivery) is traded at 1,511 USD / t oz. a 7.8$ increase or 0.52%, as of 08.44*.
Current silver price, short term futures is at 37.91 USD / t oz – a 0.794 incline or 2.14%, as of 08.45*.
The current ratio of gold to silver prices is at 39.8.
Gold and silver prices Outlook and Analysis:
The freefall of silver prices managed to bounce back as the effect of the CME margin rise in silver prices starts to dissipate. The effect from last week’s increase in US dollar against major currencies also seems to be over for now. Therefore, I still speculate that silver prices, much like major other commodities, will continue their comeback. This comeback however won’t last a long time and is likely to moderately affect silver during the week.
Gold prices didn’t suffer from a downfall as silver prices did last week. Nonetheless, gold price much like silver is likely, in my opinion, to continue to moderately incline.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Chinese Trade Balance report
3.00 – Chinese CPI
13.30 –Canadian Trade balance
13.30 – Report on American Trade balance
15.30 – EIA report about Crude oil inventories
For further reading (in this site):
- Weekly outlook for May 9-13
- Gold & Silver started May with sharp falls | 2-6 May
- Gold and silver prices outlook May 2011 – what’s next for gold & silver?