Gold and silver sharply fell yesterday as the speculations around the Euro debt crisis shifted direction from pessimism to light optimism; the recent talks are that Italian officials have held talks with Chinese delegates regarding investing in the country. This may have been among the factors to pull the US stock markets up and consequently trading down gold and silver; the appreciation of the USD against the AUD may have also contributed to the falls of bullion prices. Today, the US Federal Budget balance report will be published, the US import prices and the Australian housing starts.
Gold and silver started the week falling: Gold declined on Monday by 2.48% to $1,813; silver also declined by 3.38% to $40.22. During September, gold slightly declined by 1.0% while silver fell by 3.7%.
On Today’s Agenda:
US Federal Budget Balance: this report will present the changes in the US federal balance for August 2011; this report indicates the government debt growth and thus may affect the USD and consequently gold and silver trading.
USD/ Gold & silver– September update
The Euro to USD changed direction yesterday and climbed 0.16% to 1.3679; during September the EURO/USD rate fell by 4.8%. The USD also depreciated on Monday against other major currencies that are correlated with gold and silver such as CAD. But the AUD/USD exchange rate fell yesterday by 1.17%. This exchange rate used to be highly correlated with gold and silver in recent months and could be linked to the recent decline in the bullion market.
S&P500 / Gold & silver– September update
The S&P500 changed direction and slightly inclined yesterday by 0.70%. During September, S&P500 fell by 4.65%. During September the S&P500 had negative correlations with the daily per cent changes of gold and silver of -0.811 and -0.317, respectively. If the stock market will continue to rise, it may further affect gold and silver to trade down.
Gold and silver Outlook:
Gold and silver continue to zigzag with no clear direction in the past several days as the speculation around the Euro debit crisis runs high. The slight rise in US stock markets the moderate fall in US Treasury yields and the appreciation of the USD against the AUD may have caused gold and silver to trade down yesterday. But a new day brings new events and the direction of the US stock market along with the USD against major currencies could affect gold and silver. Following such a sharp fall in gold and silver prices yesterday, there may be a correction today. During the remainder of September, I still speculate gold and silver will continue to rise at a slow pace.
For further reading:
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.
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