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Gold Daily Outlook 08.01.2011

Gold Daily Outlook 08.01.2011

2011-08-01 16:15:00
Lior Cohen, Energy Analyst for Trading NRG,
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Gold & Silver - Daily Outlook August 1

The debt ceiling was raised by $2.1 trillion and the financial market has gained back some of its stability. Gold and silver started off the month with sharp falls. Today, the U.S. ISM Manufacturing PMI report will be published.

Let's examine the precious metals market for today, August 1st:

Gold finished July with a 0.93% increase as it reached $1,631.

Silver also inclined by 0.78% to $40.11.

During July, gold increased by 8.5%, and silver inclined by 15.1%.

The chart below shows the normalized gold and silver (June 30th 2011=100).

Gold_Daily_Outlook_08.01.2011_body_Gold_prices_forecast__silver_price_outlook_2011_August_1.png, Gold Daily Outlook 08.01.2011

The chart shows the steep upward trend of gold and silver mainly during the first couple of weeks of July.

The ratio between gold and silver moderately inclined on July 29th by 0.1% to 40.67. During July silver has outperformed gold as the ratio fell by 5.7%.

Gold_Daily_Outlook_08.01.2011_body_Gold_prices_forecast__silver_price_outlook_ratio_2011_August_1.png, Gold Daily Outlook 08.01.2011

US Debt Ceiling – The Debacle Continues

By the end of the weekend, the Democrats and Republicans have reached an agreement to raise the US debt ceiling by $2.1 trillion.

This increase should suffice through 2013. The financial market has soon reacted to the news as the USD appreciated against major currencies, while gold and silver declined (see below).

There will continue to be ramifications for this recent debt limit increase as the US economy is still struggling on the one hand and its debt continues to grow on the other.

USD/ Gold & Silver

The Euro/USD exchange rate inclined on Friday by 0.45%; during July this exchange rate fell by 0.7%. The USD also moderately depreciated against other currencies including the YEN by the end of July. Currently, the USD is traded up, which might be stem, in part from the recent news about raising the debt ceiling. If this trend will continue it could have a negative effect on gold and silver and pressure them to trade down.

US ISM Manufacturing PMI

This report will indicate the monthly change in manufacturing sector on a national level. During June ISM Manufacturing PMI inclined to 55.3% an increase of 1.8 percent points compared to the previous month's index; if this index will continue to be robust and incline, it may further strengthen the USD and consequently affect gold and silver.

Gold and Silver Outlook:

Gold and silver changed direction and stared off August with sharp falls. This might be stem, in part, from the recent news from the US on raising the debt ceiling as the uncertainty in the financial market has subsided, and causing the demand for gold and silver, as a safe heaven, to drop; there might also be speculative movement in the bullion market as traders might seek to cash out from the sharp rises in gold and silver during July. In any case, July is over and August brings new rules and might bring new direction for gold and silver.

For further reading:Weekly outlook for August 1-5

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

By: Lior Cohen, Energy Analyst forTrading NRG

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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