Gold & Silver Prices – Daily Review August 23

The week may have started with gold and silver rising, but they may curb some of their recent gains during the day. Is this just a correction or a beginning of change in pace?

Today, the US new homes sales report will be published, the French and German flash manufacturing PMI and the core retail sales of Canada.

 Gold and silver –August

Gold and silver continue to break new highs: Gold price rose on Monday by 2.14% to $1,891; silver also inclined by 2.11% to $43.37.During August, gold increased by 16%, and silver inclined by 8.1%.

The ratio between gold and silver continues to remain around the 44-45 mark; on Monday, August 22nd it reached 43.63. During August gold has outperformed silver as the ratio inclined by 7.3%, but in the past several days this situation is slowly shifting.

 USD & US Treasuries / Gold & silver– August update

The EUR/USD exchange rate continues to seek direction and declined yesterday by 0.27%. The USD also appreciated against other major currencies including AUD and YEN. Bloomberg reports that currently US dollar is traded down due to the recent China manufacturing survey that showed a slowdown in China’s manufacturing activity.     

 As seen below, the major currencies are more correlated with the daily per cent changes in silver than with gold. Gold price was mostly correlated with USD/YEN. If the Forex markets will continue with its high volatility, it could push up gold and silver.

 The US 10-year Treasury yields continue to fall as they have reached 2.06% – nearly a 0.84 per cent point fall from last month and 0.19 per cent point fall from last week.  As the demand for U.S. Treasury rises, it indicates that traders seek safe heavens including gold and silver.

 Gold and silver Outlook:

Gold and silver enjoyed an upward trend in recent weeks; if gold and silver will trade down today, it will likely to be a correction to the sharp gains they have had. Currently there are no major news items that could support a drastic change in direction.  If the stock markets will bounce back from their falls, and the USD with further appreciate these factors may curb some of the gains in gold and silver. 

 For further reading: Weekly outlook for August 22-26


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