Guest Commentary: Gold & Silver Prices - Daily Outlook 09.02.2011
Gold and silver started September with light falls, but they have already changed direction and started the day rising. Yesterday the EURO/USD decreased again as the US PMI manufacturing index showed a growth but at a slower pace. Today, the US unemployment rate & non-farm employment report was published and didn't show an increase in employment.
Let's examine the precious metals market for today, September 2nd:
Gold and silver finished yesterday with moderate falls: Gold fell on Thursday by 0.1% to $1,831; silver also inclined by 0.73% to $41.77. During August-September, gold increased by 12.3%, and silver by 4.1%. The chart below (normalized gold and silver (August 15th 2011=100)) shows the price development of precious metals in the past couple of weeks.
US PMI Manufacturing Slightly Fell in August But Still Growing
According to the recent U.S. Manufacturing ISM report, the U.S. Manufacturing PMI reached 50.6% during August - a 0.3 percent points decline. This means that while the US manufacturing sector is still growing, it grows at a slower pace in August compared to July. This report is supposed to have a negative effect on gold via the US dollar. It could have contributed to the drop in gold yesterday.
On Today's Agenda - U.S. Non-Farm Employment Report
In the last report (July) the number of non-farm payroll employment rose by 117 thousand people, which is nearly the rate needed to maintain the unemployment rate unchanged; update: US employment didn't change in August. This figure is likely to further help push gold and silver prices up via theUS dollar.
USD/ Gold & Silver– August Update
The EURO/USD exchange rate declined again for the third straight business day, yesterday by 0.77%; this ongoing appreciation of US dollar against the Euro is likely to be one of the factors for the drop in gold and silver yesterday. On the other hand, the USD depreciated against other major currencies including AUD and CAD.
Gold and Silver Analysis:
Gold and silver started September with light falls probably, in part, due to the ongoing appreciation of the US dollar against the Euro; the stock markets indexes traded down and US long term Treasury yields also fell yesterday; these factors are likely to contribute the rally of gold and silver throughout the day. The US Labor report that was published today didn't show an improvement in the labor status even though the unemployment rate remained at 9.1%. This news is likely to further push up gold and silver as it shows the US economy isn't entirely out of its slowdown and thus rekindles the debate over the chances the Fed will implement another stimulus plan. Therefore, I still think 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.
By: Lior Cohen, Energy Analyst for Trading NRG
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.