Gold Continues Its Uptrend But For How Long?

Gold prices have been stubbornly moving higher and higher over the last few weeks, helped by the weakening of the dollar across the board and it has been the same story on Friday and today morning as well. We had expected a correction in the gold prices towards 1170 but the correction could not push the prices down by more than $15 and the prices have since bounced right back and the gold prices are now trading just below 1220 and they look set for more. We believe that gold prices could reach as far as 1270 in the short term and had suggested a correction towards 1170 as a way of entering into the gold longs for the bulls. There has been an increase in global risk and uncertainty with the new Trump Presidency in the US and also the continuing Brexit process with its share of twists and turns. Normally, during times of high risk, it is usually the dollar that gains the most across the board but this time, a large part of the risk is due to the dollar itself and hence gold has been able to make the most of it and we have been seeing buyers flocking to buy more and more gold since the beginning of the year in anticipation of these risks.

There was some news on the oil front as well, over the weekend, as there was a compliance meeting between the oil producers to study the progress of the production cut agreement and to see if the producers are cutting the production as per the agreed deal and the gist of the outcome is that the deal is proceeding as per plan and it has been exceeding expectations and the producers seem to be quite happy. The market does not seem to have taken that bait as yet as the oil prices continue to consolidate near the highs of its range and it remains to be seen whether the prices push through towards $55 and further towards $60 which is where the producers would like to see oil prices in the short term.

Silver also continues to trade strongly in line with the gold prices and is set to have more gains in the short term as the commodities make full use of the weakness in the dollar to make some serious gains. The global risks also help to push the commodity prices higher and this trend to likely to continue in the markets till the dollar weakness subsides and the markets begin to lose fear.