Outlook Gold Prices and Silver Prices February March 2012

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Predict gold and silver prices outlook March 2012, we must understand where gold prices rose 11 percents and silver prices rose 19.15 percents during January 2012.

Gold Prices and silver prices during February 2012 start with little change, by February 26, 2012 gain 2.07 percents and Silver rose by 6.49 percents. The chart below shows the developments of gold and silver prices during February, in which the prices are normalized to 100 on January 31st 2012.

Gold and silver prices slightly fell on Friday after they have risen very precipitately during most of the week. There are several updates regarding the Greek debt crisis including the German vote, ECB lending policy and more. Bloomberg reports gold holdings in Exchange Traded Products increased for the fifth consecutive day to a record high. Currently gold and silver prices are rising (update: silver is up by over 4% while gold is only up by 0.69% as of 20:31 GMT; the sharp gain in silver couldn’t just be explained by the gains of gold , Euro and AUD – I will refer to this interesting occurrence in tomrrow’s analysis). Today, the U.S Core Durable Goods report will be published and the U.S. Consumer Confidence.

Here is a short analysis on gold and silver for Tuesday, February 28th:

Gold and Silver– February Update

Gold price slightly decreased on Monday by 0.08% to $1,774.9; silver on the other hand moderately increased by 0.52% to $35.60. During February, gold rose by 1.98% and silver by 7.04%.

The ratio between gold and silver slightly fell during Monday, February 27th and reached 49.85 – the lowest level since October 28th, 2011. During February the ratio declined by 4.73% as silver has slightly outperformed gold.

The next chart presents the shifts in the ratio of gold to silver (gold price/silver price) during February; the ratio didn’t change much during the month until the last few days of the month when the ratio plummeted. The ratio decreased as silver price has outperformed gold price. In the last week of February the ratio declined to nearly the 50 mark – lowest mark since October 2011.

Gold and silver trading up during February 2012 as following factors;




    • The decision of EU ministers of finance to approve the next bailout package to Greece (see below for more on this subject);






  • Following said decision, the Euro sharply appreciated against the U.S. dollar mainly during the penultimate week of February;





  • The ongoing FOMC pledge to keep rates low until late 2014;





  • The U.S. federal deficit grew by 27 billion during January 2012; this expansion slightly raised the uncertainty level in the market;





  • The rise in U.S long term securities yields during most of the month;






Gold and Silver prices Outlook 2012 March

Several factors to consider that may affect the direction of gold and silver:

The ECB will decide during the second week of March its rate; in February the ECB President left the interest rate unchanged at 1.00%. If the ECB will lower the rate, this may curb the recent rally of gold and silver prices.

The European debt crisis has had a negative effect on the Euro and this in turn may negatively affect gold and silver prices. If the G20 will issue another rescue fund, it could lower the anxiety in the markets and thus trade up commodities prices.

The upcoming testimony of Bernanke on March 1st and even more importantly the FOMC meeting which is set to March 13th could shake up the precious metals market. If there will be another announcement of monetary easing such as QE3, it could promptly and positively affect gold and silver. But I speculate there won’t be a big announcement of QE3.

Federal Reserve’s pledge of keeping rates low until late 2014 will keep gold and silver prices high; once this pledge will be over (perhaps even if the Fed will break its promise and raise rates earlier than 2014) it could start adversely affecting gold and silver prices.

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