Gold Continues Higher as CPI Looms

Colin First

Gold prices continued to move higher and now they are back in the highs of their yearly range and this means that they are very close to their highs of the year and thus in an important position. The tension between North Korea and the US continues to escalate on a daily basis with each side trading charges against the other and threatening to attack and this has dominated the market headlines over the last few days. This has helped to awaken the sleeping giant in gold and it has since risen by over $30 during the course of this week. Now it is near the highs of its range. It has to be said that this rise is not only due to the increase in global risk but also due to the slight weakness in the dollar. Normally, in times of high risk, we find that the stock markets crash as the funds tend to get pulled out of it.

Gold Likely to Stay Bid

These funds then begin to make their way towards gold, dollar, yen and the swiss franc as these are considered to be safe havens. But, so far, we have seen the dollar struggle at this time as the US itself is involved in the escalation of this risk. This is the reason why the gold prices have been finding it easy to move higher and yesterday, we saw the prices push through 1280 and now it is at a tipping point. That tipping point could come later in the day today when the CPI data from the US gets released. This will give a hint on whether the inflation continues to build, which will help the Fed to hike rates, or whether the recovery in the US economy, as evidenced in the strong NFP report from last week, was just a flash in the pan and this could then determine the short term direction for gold.

Gold Hourly
Gold Hourly

This increase in tension between the US and North Korea seem to be affecting the oil prices as well as they have dropped through the $49 region and now trade just above the $48 region as of this writing and continues to look weak. The fact that the oil prices have not been able to hold on to gains of late should be a matter of concern for the traders and investors alike and this, coupled with the supply concerns, is likely to keep the oil prices under pressure in the near future.

Silver prices broke through the critical region around $17 and trades just above that region as of this writing and it remains to be seen whether the bulls would be able to hold on to the gains when the CPI data from the US releases today.

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