Gold & Silver Prices – Daily Outlook August 24

Gold and silver fell for the first time in several days, while the S&P500 and other US stock markets sharply inclined yesterday. Today, the US Report on core Durable Goods will be published.

Gold and silver changed direction and fell yesterday: Gold fell on Tuesday by 1.62% to $1,861; silver also declined by 2.39% to $42.33. During August, gold increased by 14.1%, and silver inclined by 5.5%. 

Bloomberg estimates Central banks will retain their gold reserves even if they will need to sell gold and raise cash to payoff their debt, due to their lack of confidence in major currencies. In recent years many central banks have stocked up and bought gold due to concerns of progress in global economy. If this trend will continue, it could further explain the rising demand for gold.

S&P500 / Gold & silver– August update

The S&P500 sharply inclined on Tuesday by 3.43%, and thus gained back some of the losses from last week. During August, S&P500 fell by 10.05%. The linear correlation of gold and silver with S&P500 index (daily per cent changes) was -0.551 (for gold) and -0.339* (for silver) as of August 23rd. If the S&P500 will continue to gain back its grounds, it may further curb the rally of gold and silver and even push it slightly down.

 US Treasuries / Gold & silver– August update

The US 10-year Treasury yields are still very low, but they have inclined from their yearly low of 2.07% on August 19th. During August they have fell by 0.62 per cent points. If the growth in demand for U.S. Treasury bills will curb, it may indicate that traders are slowing down from their panic towards seeking safe heavens including gold and silver.

 Gold and silver Outlook:

Gold and silver changed direction and fell yesterday. The rally of the stock market and the rise in US Treasury bills yields in the past couple of days may indicate that the gold rush is slowing down. I don’t think it’s a change in direction and gold and silver may continue to rally but at a much slower pace. If the stock markets will continue to incline today it may further curb some of the gains in gold and silver. 

 For further reading:

Gold and silver prices outlook for August 2011

Weekly outlook for August 22-26

 Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.