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Commodities Consolidate as Global Risks Recede

By:
Colin First
Published: Jan 24, 2017, 07:19 UTC

It was a day of consolidation for the commodities, consolidating the gains that they have made over the last few weeks. We did have brief periods of

Commodities Consolidate as Global Risks Recede

It was a day of consolidation for the commodities, consolidating the gains that they have made over the last few weeks. We did have brief periods of dollar weakness yesterday which was capitalised upon by certain currencies like the euro and the yen but the commodities remained largely unmoved. We are into the last full week of the month when the economic news and data dries up and there is no specific impetus for the markets to move in any specific direction. It is more of a digestion of the events that have happened during the early part of the month and preparing for the month ahead. This is one of the reasons for the stagnation in the commodity prices over the past 24 hours. The other reason is that the global risks and fears have got themselves a break for a day or two. Generally, funds tend to pour into gold when the global risks rise and funds tend to move out of gold when the global risks recede. Last 2 days, we have the new administration in US settle down and we also have a gap in the Brexit process as the UK waits to see the ruling from their Supreme Court in the same. This has given a pause in the whole global fear scenario and this is another reason for the consolidation in the gold prices. They are at the highs of their most recent range and it is going to be a crucial few days to see whether gold continues on its uptrend or whether there is a correction.

Gold Hourly
Gold Hourly

Oil prices have also been fluctuating and consolidating near their highs for a few weeks now, and the traders and investors are not sure of which direction to go. It had a strong uptrend after the announcement of the production cut deal but after that, the prices have stagnated as the market has entered into a wait and watch mode to see how it can move depending on the incoming data. The data has still not reflected the changes in the supply though the oil producers have confirmed that the deal is in place and being implemented effectively. The ideal price for oil would be somewhere around $60 but it remains to be seen how soon the bulls can reach that figure.

Silver prices also continue to consolidate in line with the gold prices and are set to closely follow the gold prices atleast in the short term.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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