Gold and silver remained unchanged in recent days: during the first couple of weeks of July (1st to 18th of July), gold rose by 8.08% and silver by 19.69%; on the other hand, during this week (July 25th to 28th), gold rose by only 0.11% and silver declined by 1.4%. This slowdown might continue until the cards will fall on the matter of the debt ceiling talks in the US. In the mean time the forex and commodities prices don’t move much. Today, the following will be published: Euro Area inflation rate, the U.S. advance estimate of second quarter of GDP and Canada’s GDP by industry.
Let’s examine the precious metals market for today, July 29th:
Gold price moderately declined yesterday, July 28th by 0.07% to $1,616. Gold slowed down in recent days and following Monday’s increase, gold didn’t change much afterwards.
Silver also declined by 1.91% to $39.79.
The ratio between gold and silver moderately inclined yesterday, July 28th by 1.9% to 40.61. During July silver has outperformed gold as the ratio fell by 5.9%.
US GDP second quarter
This report will show the GDP growth rate of the US economy during the second quarter of 2011. During 1Q 2011 the annual growth rate was 1.9% growth – a drop from a 3.1% annual growth rate during 4Q 2010; The early speculations are that this second quarter GDP growth rate won’t show any large improvement from the first quarter, and it may just increase around the 1.5 -2.0% annual growth rate. If there will be an increase in growth rate above expectations it might strengthen the USD and consequently weaken gold and silver.
US debt ceiling – the debacle continues
Republicans will try to revive their plan to pass a budget deficit cutting bill today, after they had failed to round up enough support to pass it yesterday. The bill was proposed by Speaker of the house Boehner. If this bill will pass, it might move the current stalemate in Washington between Republicans and Democrats over raising the debt ceiling. On the other hand, President Obama said if the bill will pass he will veto it. The deadline before the US is expected to default on its debt is August 2nd.
Gold and silver Outlook:
Gold and silver didn’t change much during the week, but as we are existing July, we might see more trading that could be translated to sharper changes in the gold and silver prices; perhaps gold and silver prices will trade down as traders might seek to cash out from the sharp rises in gold and silver during the first half of July. The market still awaits the conclusion of the US debt ceiling debacle. The US GDP report might also push gold and silver prices down if the GDP growth rate will beat expectations.
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.