Gold Prices Bounce Off Lows

The gold prices have made a visit to the bottom of the range near the 1300 region and have since bounced back and now trade comfortably above the lows on the back of weakness in the dollar and also increased risk all around the world which has hit the stock markets very hard. It is a well known fact that during times when the risks around the globe increase, the funds get pulled out of the stock markets and pushed into the gold market and that is what we have been seeing in the last 24 hours. It has come at the right time for the gold bulls as it has helped the prices to rebound from the lows.

Gold Bounces

The reason for the rebound can be placed squarely on the fact that the US administration has gone ahead and imposed a tariff on the import of steel and aluminium. Though this move is likely to affect the domestic car industry and this was one of the reasons for the fall in the stocks of the car companies, the more important factor is the uncertainty and the risk that such a move is likely to bring along. China is expected to respond in kind and this is likely to lead to an escalation in the trade war which is not good for anyone in the long run. It is this uncertainty that has caused a fall in the stock markets. We believe that this would continue in the short term.

The oil prices continued to slide lower despite the weakness in the dollar as the choppy trading continues in the oil market. As we have been saying all along, the main moves in the oil market are all done for and so what we are going to see in the short and medium term is just the choppiness and slow moves that are based more on the incoming news and data rather than any specific major fundamentals.

The silver prices have also been trading in a strong consolidation mode over the past couple of weeks and this is likely to continue in the short term between the $16 and the $17 regions.