Guest Commentary: Gold & Silver Daily Analysis 08.26.2011
Gold and silver inclined yesterday and gained back some of the losses they had endured in the past couple of days that were stem, in part, by the recent CME margin hike on gold trading. Today, the US GDP second quarter report for 2011will be published; Euro Area monetary development; and more importantly Bernanke will give a speech in Jackson Hall.
Gold and silver changed direction and rose yesterday: Gold price rose on Thursday by 0.34% to $1,763; silver also sharply inclined by 4.06% to $40.79. During August, gold increased by 8.1%, and silver by 1.7%. The chart below shows the normalized gold and silver (July 29th 2011=100).
The ratio between gold and silver continues to remain around the 43-45 mark, but has a moderate downward trend in recent days; on Thursday, August 25th it reached 43.22. During August, gold has outperformed silver as the ratio inclined by 10.2%.
There are many who speculate what will be today on the agenda of Chairman of the Federal Reserve's speech. If Bernanke will say or even just hint of a new quantitative easing plan it may sharply affect trading and likely to pull gold and silver up in the short run. The problem is that there were many who criticized the Fed's expanding monetary policy (QE1 and QE2), its effectiveness and the effect it had on US dollar, US debt holders and major commodities prices.
S&P500 / Gold & Silver– August Update
The S&P500 changed direction and fell on Thursday by 1.56%, and thus gained back some of the losses from last week. During August, S&P500 fell by 10.29%. If the S&P500 will drop today, it may help pulling up gold and silver.
USD/ Gold & Silver– August Update
The Euro/USD declined again yesterday by 0.25%. During August, the Euro/USD changed directions 15 times (on a daily basis). The USD also appreciated against other major currencies including AUD and CAD. The changes in USD (currently) don't seem to have much of an effect on gold and silver.
Gold and Silver Analysis:
Gold and silver bounced back from their sharpest single day drop in a very long time; this sharp correction was likely prompted from the CME margin on gold trading that came into affect yesterday. This correction seems to be behind us and now gold price is slowly gaining back its value. Silver was also dragged down probably due to its tight correlation with gold, but silver also bounced back. The financial markets are looking towards Bernanke's speech today in Jackson Hall and whether he will refer to any future stimulus plans that the Fed may have in the near future. If Bernanke will deliver any news on a QE3 or other plans, it may stimulate trading and likely to pull up gold and silver.
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.
By: Lior Cohen, Energy Analyst for Trading NRG
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