Gold & Silver – Daily Outlook 13 June
Gold and silver finished the week with falls, but will these falls continue this week? Currently gold prices are traded down, let’s examine the main news and analyze the precious metals market for today, June 13th:
Gold and Silver– June
Gold price ended the week, June 10th with a 0.88% drop as it reached $1,529.
Silver also declined that day by 2.93% to $36.33.
During June, gold decreased by 0.5%, while silver declined by 5.2%.
The chart below presents the normalized gold and silver (May 31st 2011=100) and their changes during June.
As of Friday, June 10th the ratio between gold and silver rose to 42.10, and during June this ratio inclined by 4.9%.
The chart below shows the fluctuations of this ratio in recent months:
US Dollar and Gold & Silver– June Update
During June, there seems to be shift in the relation between the changes in US dollar and gold and silver:
The chart below shows the correlations between the daily percent changes of gold & silver prices and major currencies during June (up to date).
The chart shows two important findings:
- The current correlations of gold with some major currencies and silver with some major currencies aren’t in sync as they usually were in previous months;
- The correlations are smaller (in absolute terms) compared with the correlations in previous months.
As a comparison, the chart below shows the correlations of gold and silver prices with major currencies during May.
These findings might be just a matter of a small sample that will change direction as June will progress; however, if these findings will prove to have some merit, they might indicate that gold and silver are pushed in different directions and their relations with major currencies are weaker than they were during May.
The only exchange rate that still shows gold and silver are in sync with is the Australian dollar to USD.
Concerns over Economic Slowdown – Europe, U.S. and China
The major news sites continue to bring peril like news headlines regarding the economic progress of the major economies:
According to Bloomberg, the concerns over the European debt crisis mainly the restructuring of the Greek debt is among the main concerns that could affect gold and silver traders.
It’s also reported that European Central Bank President Jean-Claude Trichet will not accept the participations of ECB in second bailout for Greece. There is a conference today in which Trichet will speak about the Euro economy and might give some further answers on the Greek debt.
U.S. economy continues to show a slowdown; following the disappointing U.S. labor report from last week, there are additional economic indicators to be published this week and may show a slowdown: According to Bloomberg U.S. advance retail sales are expected to fall by 0.5%, after they rose by 0.5% in April. This might further push down US dollar and consequently raise gold and silver.
China is also having its own problems and there may be a slowdown in its economic progress: its industrial production growth may have slowed down to 13.1% during May compared with 13.4% during April.
Tonight, the Chinese CPI will be published; the expectations are that the CPI will grow from 5.3% in the previous month to 5.5%. If this will be the case, China might consider taking further steps to curb the rising inflation. China is among the leading countries in importing gold and silver; this slowdown might curb the growth of demand for precious metals.
Gold and Silver Prices Outlook:
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
15.00 – ECB conference Trichet speaks
3.00 – Chinese CPI
Tentative – Bank of Japan – rate decision and monetary policy statement
13.30 – U.S. producer price index news
By: Lior Cohen, Energy Analyst for Trading NRG
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