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Gold continued its slow upward trend and moderately increased yesterday, while silver changed direction and was traded down. The recent manufacturing PMI reports showed that EU and China’s manufacturing might have shrunk during February. This news may have curbed the rally of gold and silver during yesterday’s trading. According to a recent report by Bloomberg Barrick officials think metals producers are due for a comeback. These producers didn’t enjoy the rally of gold in recent years as many traders have invested in gold based funds such as SPDF, and thus keeping metal producers’ stocks cheep. I will examine this issue in a future post. Today, there is the G20 Meeting, and U.S. Unemployment Claims weekly update will be published.
The ratio between gold and silver sharply rose on Wednesday, February 21st and reached 51.60. During February the ratio slightly declined by 1.39% as silver has moderately outperformed gold.
On Today’s Agenda
initial claims decreased by 13,000 to 348,000 claims for the week ending on February 11th; the number of insured unemployment also decreased by 100k to 3.426 million during the week of February 4th; the upcoming weekly update might affect the direction of the US dollar and consequently gold and silver;
Euro/USD and Metals – February
The Euro/USD slightly rose on Wednesday by 0.11% to 1.3249. During February Euro/U.S Dollar increased by 1.3%. The correlations among the Euro and precious metals are still robust (the linear correlation between the Euro/USD and gold price is 0.32). Therefore, if the Euro will continue resume its rally; it could indicate that gold and silver will also rise.
Gold and silver didn’t do much yesterday after they had started the week with very sharp gains. The upcoming U.S. unemployment claims weekly update might affect the direction of gold and silver via their relation with U.S dollar. I speculate these metals will continue their rally but at a slower pace than at the beginning of the week.