Gold and silver prices are currently traded with high rises as traders and investors bet against the US dollar which is still weak compared with major currencies, will these rises in gold and silver prices continue?
Let’s examine the news and events that might affect current gold and silver prices as of April 28th:
Gold and silver prices for April
Gold prices reached yesterday 1,517$ and silver price was near the 46$ mark. Up to April 27th, silver price has risen by 21.88%, while gold price increased by 6.17%.
The gold to silver ratio: As of yesterday, April 27th the ratio between gold and silver prices declined to 32.99. The ratio could be interpreted as one troy ounce (31.1 gram) of gold is worth 32.99 troy ounces of silver.
US economy – update
According to Bloomberg, US Federal Reserve officials stated that the Fed will complete its stimulus plan of 600 billion USD bond purchasing by June, and will maintain the current low basic interest rates level (at 0-0.25%).
The Fed’s policy is concentrated on pulling the US economy out of its stagnation than the rising commodities prices or the weakening of the US dollar.
Ben Bernanke is set to talk tomorrow about Community Development in Challenging Times. He will probably also update about the progress of the Fed’s stimulus plan.
The Department of Labor will publish today the US employment claims report. During the week ending on April 16th, initial claims decreased by 13,000, to reach 403,000claims; and the insured unemployment rate remained unchanged at 2.9% for the week ending on April 9th.
The Gold and the Honk Kong dollar
The current correlation during April of USD/HK and gold prices (daily percent changes) is at -0.38 – a moderate strength negative correlation. The correlation with silver prices is at -0.579, a strong negative linear correlation, i.e. as the HK gets stronger against the USD, gold prices also increased. There wasn’t such a strong correlation for these data series in the last previous months as seen in the chart below. This might mean that Hong Kong, one of the largest consumers of gold in recent years have a higher role in the gold and silver prices hike in the past month (this conclusion should be marked with an asterisk because correlation doesn’t mean causation).
Update from Middle East
At least 400 people died during the violent confrontations between the Syrian army and civilian protestors against the current regime and current President of Syria Bashar al-Assad, during the last several days.
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 rises:
The current gold price, short term futures (May 2011 delivery) is traded at 1,529.0 USD / t oz. an 11.9$ increase or 0.78%, as of 12.57*.
Current silver price, short term futures is at 48.385 USD / t oz – a 2.398 incline or 5.21%, as of 12.57*.
(* GMT)
The current ratio of gold to silver prices is at 31.60.
Gold and silver prices Outlook and Analysis:
The current high rises in gold and silver prices might be driven by the upcoming speech that Fed chairman Ben Bernanke will give tomorrow that rekindled the depreciation of the US dollar; the Federal Reserve is set to keep the interest rates low as they were in the past couple of years. The moderate interest rate hike of the ECB a few weeks back also contributed to the weakening of the USD. After the last couple of days of moderate changes in gold and silver prices, the current hike is probably stimulated by entrance of hot and speculative money to the precious metals markets. This rises, I speculate, are likely to slow down by the end of the week.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Today
13.30 – Department of Labor report – US unemployment claims
15.30 – EIA report about Natural gas storage
Tomorrow
09.00 – Monetary developments in the euro area
13:30– Canada GDP by industry
17.30 – Ben Bernanke, Chairman of Fed, speaks
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