Gold Continues to Consolidate and Looks to Breakout

Gold prices once again ranged within a small and tight range as it has been doing since the beginning of the week. What has been noticeable is the fact that the gold prices have been coiling themselves into a tight range which would mean that a large move is around the corner once the breakout happens and the traders must be ready for the in the short term. We do not know which way it is likely to go as yet as the price movements have been quite choppy. The 1300 region has been acting as a very strong resistance which is natural as it is a large round figure and it is important for the market dynamics as well.

Gold Prices Coil

It would require some major change in the monetary policy or an increase in geopolitical tension for the prices to break through the region. But we have also seen that the prices have refused to fall despite the easing of global risks and the rise in the stock markets which means that the longs are probably building up in the lower parts of the range and they are likely to keep the prices from falling. This also points to the fact that the price may break out in the upper side of the range in the short term. Market is right now in a wait and watch mode as it awaits the meeting at the Jackson Hole which is set to begin later today and it will be followed by speeches from Draghi and Yellen later tomorrow. These are the events that are set to shape the short term trend for the gold prices.

Oil prices rose higher and back above the $48 region as the oil inventory data showed that the draw in the inventory was as expected and this also confirmed that the inventory in the US was getting lower. This was good news for the oil bulls as a lowering of the inventory would mean that the demand is high and that the supply is less and this is good for the oil prices. The prices are likely to remain buoyant in the short and medium term and there is no change in our bullish outlook for oil prices.

Silver prices, following the gold prices as usual, have been consolidating on either side of $17 over the last 24 hours and this consolidation is expected to continue in the short term.