Guest Commentary: Gold & Silver Daily Outlook 03.27.2012
Gold and silver sharply rose for the second consecutive business day. The big news from yesterday was Bernanke's speech on the labor market, which rekindled the speculation of the Fed's monetary intervention in the U.S market. This in turn may have been among the key factors in pushing bullion up during yesterday's trading. Today, U.S. consumer confidence report will be published, and Bernanke will give a short speech (but not in the same magnitude to affect the markets as yesterday's speech).
Gold prices sharply rose on Monday by 1.4% to $1,688; silver also traded up by 1.48% to $32.75.
The ratio between gold and silver slipped to 51.55. During the month the ratio rose by 4.35% as silver has underperformed gold. In the chart below are the changes in this ratio during the month.
On Today's Agenda
U.S Consumer Confidence: according to the recent report, the consumer confidence index increased in February compared with January's index. The current expectations are that this index may change direction and decline in the March index despite the U.S. economy's signs of progress; this report might affect bullion via USD;
Forex / Gold & Silver– March
The EUR/USD rose on Monday by 0.67% to 1.3359; furthermore, the AUD and CAD also appreciated against the USD by 0.68%, and 0.73%, respectively. The AUD, CAD and Euro were historically linearly correlated with the daily percent changes of gold and silver prices. If the Euro/USD and AUD/USD will keep their rally today then they may indicate gold and silver prices may also rise.
Gold and silver started to show strength in the last couple of days as both metals trade up sharply in the last couple of business day. The recent dovish speech of Bernanke regarding the labor market will probably continue to have lingering effects on the metals markets. Even though the fundamentals haven't changed, the recent market sentiment may have shifted again and we might be seeing speculative funds entering the gold and silver market and thus driving metals up. Today, the U.S consumer confidence report may also affect the USD and consequently metals.
This gold and silver outlook was first presents in Trading NRG
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By: Lior Cohen, M.A. in Economics, Commodities Analyst and Blogger at Trading NRG
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