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Gold Bulls Take Advantage of Dollar Weakness

By:
Colin First
Updated: Jun 28, 2017, 07:12 UTC

Compared to the rest of the market and the other major instruments, the movements in the gold prices over the last 24 hours has been somewhat muted which

Gold Bulls

Compared to the rest of the market and the other major instruments, the movements in the gold prices over the last 24 hours has been somewhat muted which should be a surprise for the bulls. The gold prices have been the first to respond on any signs of strength or weakness in the dollar and though we saw the dollar weaken across the board and the stock markets fall, we did not see much of a reaction from the gold prices, atleast not yet. As expected, the gold prices fell from 1260 towards 1240 where they found some buying support and this helped the gold prices to bounce back. The prices have been moving steadily higher since then and it now trades just above 1250 as of this writing and with the dollar weakness continuing, we should see gold continuing to stay bid in the short term.

Gold Prices Move Steadily Higher

The dollar has got itself into a lot of trouble and this is despite the fact that the Fed has been doing its bit in supporting it. The incoming data from the US has not been supportive of the dollar and it is clear that there is a lot of policy paralysis in the US political circles with the Republicans themselves not being able to agree on several plans and hence not being able to push through bills despite holding a majority in the Parliament. Yesterday was the latest saga with the healthcare reform bill hitting a roadblock and getting delayed further and this was the reason for the dollar weakening which has in turn helped the gold prices to move higher.

Gold Hourly
Gold Hourly

Oil prices have been climbing steadily higher ever since the beginning of the week on the back of fears that the escalation of the conflict in the Middle East could affect the oil production from that region. Today is likely to be an important day as we are going to see the inventory data from the US. The data has been disappointing for the oil bulls over the last 2 weeks and it remains to be seen whether the data today would be bullish. We somehow believe that the oil prices may have reached a bottom and we believe that the parties involved in the Middle East problem would like to see the oil prices higher and they should be able to achieve it in the medium term.

Silver prices have been moving steadily higher over the last couple of days, in line with the gold prices and we believe that they should be challenging the $17 level 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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