Commodities Consolidate as they Await Next Direction

Gold prices and other commodity prices continued to consolidate for the second day. After a strong uptrend during the early part of the year, gold price seem to have settled down and they are waiting for some impetus from some direction for it to make the next move in a specific direction. The prices are stuck in the higher part of their range and are in a very crucial region and the breakout from this region could determine the short term trend for the gold prices. A breakout on the top side could open up the possibility of the prices reaching 1270 while a breakout in the bottom could lead the prices back where it all began at 1150. But with the dollar index looking to strengthen across the board in due course of time, we believe that the risk is more to the downside rather than upside and we advise our traders to wait for a breakout in that direction to enter into a trade. Things have not been as easy and straightforward as we had expected it to be and the dollar has not had a cakewalk. It is in fact, struggled to get any traction over the past few weeks and all its bounces have been met with selling. So, the fall of the gold prices is not a given as yet and we believe that there is some more consolidation and maybe even some danger on the upside and that is why we advise the traders to wait and watch from the sidelines.

Oil prices have also been consolidating over the past couple of days as they have been unable to make any sort of headway in the face of a little bit of dollar strength and continuing confusion surrounding the actual effect of the oil production cut agreement. The data does not reflect much effect from this agreement and this has disappointed the oil bulls and as a result, we have not seen the oil prices move towards the $60 mark which we had been expecting. Also, the return of the dollar strength could place additional pressure on the oil prices and unless the oil data becomes strong quite soon, the bulls might be in a bit of trouble.

Silver prices continued to consolidate similar to that of the gold prices and this trend is set to continue for a few days more as the markets await some direction.