Let’s examine the news and events that might affect current gold and silver prices as of April 8th:
ECB raised its interest rate
European Central Bank decided to raise the Euro Area interest rate by 0.25 percent point to 1.25%.
The main concern of ECB for raising the interest rate was that this low rate might have pressured the Euro Area inflation, which reached 2.6% in March 2011 in annual terms, which is above ECB’s target inflation of 2%.
For now this decision might have affected precious meals prices, as silver is currently traded at over 40$/oz. which is its highest price level since Feb. 11, 1980, in London, because of the weakening of the US dollar compared to the Euro.
In the following weeks and months it will be reveled if this decision will have any ramifications on the commodities markets, I remain skeptic as to whether this interest rate hike will have much of an effect.
War In Libya – update
The fights between the rebels and Gaddafi’s Army continue with no end in sight. This war has affected the crude oil market as Libya is among the OPEC countries and has the largest oil reserves in Africa.
Gold and silver prices April 2011
The month of April started off with rises for gold and silver prices. During March silver prices rose by over 10% while gold prices didn’t do much.
In the chart below are the changes of gold and silver prices during March and April 2011 as the prices are normalized to 100=1/3/2011; the chart shows how silver prices has been outperforming gold prices especially since mid March 2011.
As of April 7th, Silver price has risen by 4.82%, while gold price increased by 2.13%.
The gold to silver ratio: yesterday, April 7th the ratio between gold and silver prices declined to 36.90 – the lowest level this year.
As presented in the graph below, the gold to silver prices ratio keeps on falling because silver prices keep outperforming gold prices.
Current Gold and Silver prices
US markets show major precious metals prices are increasing:
The current gold price, short term futures (May 2011 delivery) is traded at 1,469.4 USD / t oz. a 10.1$ increase or 0.69%, as of 14.58*.
Current silver price, short term futures is at 40.22 USD / t oz – a 0.668 increase or a 0.48%, as of 14.58*.
The current ratio of gold to silver prices is at 36.5.
Gold and silver prices Outlook and Analysis:
The recent decision of ECB to raise its interest rate might push some investors to trade their gold and silver with government bonds, however since this interest raise was expected and wasn’t a high raise, traders in the commodities markets don’t seem to react to this news, and if any the major commodities keep on rising, such as gold, silver and crude oil.
In the mean time, I still speculate that gold prices will continue to moderately rise as the week will progress. The same goes for silver prices.
Here is a reminder of the top news and reports that are published today (all times GMT):
12.00PM – Canada unemployment rate report
For further reading (in this site):
- Crude oil prices Monthly outlook –April 2011
- Weekly outlook for April 4-8
- Gold Prices Outlook for 2011 and Analysis of 2010
- Gold prices outlook for April 2011 – what’s next for gold?