Gold Continues Lower But Is This the End?

We had mentioned last week in our forecasts that the gold exposes itself to the risk of correcting towards the broken resistance in the 1265 region and yesterday, we saw the completion of this move as the gold prices continued to drop since the beginning of the week and the pair now trades just above 1260 as of this writing and it now looks to consolidate on its losses and waits for direction. The gold prices had had a very large gap down to begin the week as the markets switched themselves on to a risk on mode following the victory of Macron in the French elections over the weekend. The traders had been a bit jittery over the last week as they were wary that the French might go the US way and vote for the hardliner in Le Pen but they chose not to and with the opinion polls suggesting a Macron victory in the May 7 run off as well, the markets are only too happy to welcome him. He is seen as very business friendly and this has helped to boost the stock markets and helped the markets to switch to risk on mode.

Gold Weakens Further

This has meant that the investors have pulled out funds from safe assets like gold and invested them into the stock markets and that is the reason why we have been seeing the gold prices fall over the last few days. We now expect some consolidation in this region and with Trump beginning to up his ante about trade wars and building walls, we expect the fears to begin to rise again slowly and this should keep the gold prices well bid and from falling further.

Oil prices made a slight recovery during the course of the day yesterday, after falling just below $49 for a brief while yesterday. But the prices continue to trade well below the psychological mark of $50 and with the inventory data from the US, set to release later in the day today, expected to show a build in inventory, we can safely expect the oil prices to continue to trade in a bearish manner for the rest of the day. This should target the lows from yesterday and we believe that this bearish phase is likely to carry the oil prices towards $47 in the short term.

Silver prices also continued to trade weakly, taking a cue from the gold prices and this is expected to consolidate in the $17.5 region in the short term before it sets itself for the next direction.