Guest Commentary: Gold & Silver Daily Outlook 02.07.2012
Gold and silver started off the second week of February with little changes. The financial community is waiting in anticipation for the results of the Greek negotiations; these negotiations might affect the direction of the Euro and consequently may also influence precious metals. But up to now, the negotiations didn't influence the forex markets. Today, Chairman Bernanke will testify in the Senate and the German Industrial Production report will come out. See here more on gold and silver daily analysis for February 7th.
The ratio between gold and silver slightly fell on Monday, February 6th and reached 51.11. During February the ratio fell by 2.32% as silver has very slightly outperformed gold.
On Today's Agenda
Bernanke Testifies in the Senate: following the recent FOMC meeting to extend the pledge of low rates until the end of 2014, the upcoming testimony will be before the U.S. Senate and will refer to the economic outlook of the U.S. and the Fed's situation. This testimony might offer some insight to the future steps on the Fed and whether another QE program is on the table; if Bernanke will even hint of another QE program (I guess he won't), if could sharply pressure up gold and silver;
U.S. Treasuries / Gold– February
The U.S. 10-year Treasury yield fell on Monday by 0.04 percent points to 1.93%; during February the 10 year treasury yield rose by 0.10 percent point. The recent rise in LT securities yields may indicate that the risk appetite in the markets was augmented. During recent weeks the relation between if the LT U.S. treasury yield and precious metals seems to have changed direction from a positive relation to a negative one. The changes in U.S. treasury market might indicate how the metals market will develop.
Gold and silver started off the week with slight changes after they have had sharp gain during most of January; the bullish sentiment vis-à-vis the commodities market has seem to change but the rally has slowed down. The upcoming testimony of Bernanke might influence bullion traders especially if he will hint of another QE program. But I guess he won't do so. In such a case, the forex market will probably affect the direction of gold and silver during the day so that if the Euro will continue to depreciate, this might also pull down precious metals.
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By: Lior Cohen, M.A. in Economics, Commodities Analyst and Blogger at Trading NRG
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