Gold & Silver Prices Outlook – 2 May

Gold and silver prices started off the first day of the month with mixed trend as gold prices are moderately rising and silver prices are moderately declining. The most important news about the death of bin Laden, affected the emotions of many traders, as major commodities started off the week with declines. Let’s see what is up a head in the gold and silver market for today, May 2nd:

Gold and silver prices for April

Gold prices closed the month of April at 1,556$ and silver price reached 48.60$. During April, silver price increased by 28.8%, while gold price increased by 8.92%. These prices levels are the highest these precious metals have been in years (for gold) and decades (for silver).


Gold and Silver prices 2011 May 2

The gold to silver ratio: As of Friday, April 29th the ratio between gold and silver prices declined to 32.03. The ratio could be interpreted as one troy ounce (31.1 gram) of gold is worth 32.03 troy ounces of silver. As seen in the chart below, this ratio has been declining during the past three months, but in the last few days the ratio balanced around the 32 mark. This might be a shift the recent trend we have experienced in 2011.


Gold and Silver prices ratio 2011 MAY 2

Bin Laden was killed by US forces

The biggest news today comes from the US president – Barack Obama who announced to the world that the US forces located and killed the known terrorist Osama Bin Laden.

The known terrorist was located in Pakistan.

You can see here the announced of Barack Obama.


US economy – update

The news from last week about the slow recovery of the US, which includes the very moderate GDP growth rate of only 1.8% during first quarter, will reach the news this week as well as the Department of Labor will report on the US employment situation on Friday. The speculations are that the report won’t show much improvement in the current US employment status. If this is the case, it might further affect traders to devalue the US dollar and be bullish on gold and silver.

Since the Fed’s policy is concentrated around pulling the US economy out of its slowdown, the side effect is that in the processes the US dollar looses it value and consequently people jump into the precious metals markets including gold and silver.

Major currencies and relation with Gold and silver

As presented in the chart below, the correlation of the AUD/USD with the gold and silver prices is still very strong. Since Australia is among the leading countries in exporting gold, its correlation with gold and silver prices is apparent and clear.

Correlation Gold & Silver Prices and MAJOR currencies USD AUD YEN Dec 2010- April 2011

Update from Middle East

During the weekend Gaddafi’s compound in Tripoli was bombed by NATO aircrafts. As a result of the air strike Gaddafi’s youngest son and three of his grandsons were killed, according to Libyan officials. Gaddafi wasn’t harmed from the recent attack.

See here for a more detailed update on Middle East and its effect on commodities’ markets.


Current Gold and Silver prices

U.S. markets show major precious metals prices are traded with mixed trends:

The current gold price, short term futures (June 2011 delivery) is traded at 1,556.5 USD / t oz. a 0.1$ increase or 0.01%, as of 12.14*.

Current silver price, short term futures is at 45.630 USD / t oz – a 2.969 decline or 6.11%, as of 12.14*.

(* GMT)

The current ratio of gold to silver prices is at 34.11.

Gold and silver prices Outlook and Analysis:


The current freefall in silver prices might be related to the news about the death of bin Laden that affected the financial markets. After all during last month silver prices rose by over 28% and they too started off the month of April with moderate falls. The declines might also be related to the expiry of the May future contracts. In the next couple of days, once these factors will have less on an effect, it will be clear if this decline is sustainable or not.


I speculate that the news about bin Laden, however, is likely to dissipate very quickly and silver and gold prices are likely to continue their slow uprise in the upcoming week.


Here is a reminder of the top events and reports that are planed for today (all times GMT):


10.00 – ECB president Trichet speaks



5.30 – Reserve Bank of Australia – rate statements



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