Gold Corrects As Bulls Take a Breather

Gold prices have underwent a small correction. There was a small period of time on Friday when gold prices again made a run towards the strong resistance around the 1244 region but there were met with some large selling as a result of which gold prices have fallen back and they trade just below 1235 as of this writing.

What Next for Gold?

Gold has been on a strong bullish run for the past couple of months and we believe that this is set to continue as long as the dollar continues to remain weak. The dollar has not been able to stitch together a decent run in recent times and this is one of the main reasons why the gold bulls have been able to take full advantage and push higher. Gold remains one of the very few “safe” instruments available and usually its limelight in times of global risk is shared by the dollar but in recent times, the dollar itself is one of the main reasons for this risk and hence the investments and the funds are pushed towards gold and only gold. We believe that the ultimate target for gold should be 1270 but with the FOMC meeting minutes out later this week and with the minutes likely to be hawkish, in line with the comments of the Fed members, we should see some serious volatility in the coming days in the gold prices which should show us the way in the short term.

Oil.. Well..!!

Oil, as usual, hasnt been doing much over the last few weeks and it is proving to be increasingly frustrating for the oil bulls. Also, with the time dragging on and the days ticking by, we are getting closer and closer to a period when the oil producers are likely to review their production cut agreement and if there are any major developments during that meeting, like calling off the entire deal as such, then it could have large impact on the oil prices and the oil bulls could be left in the lurch. This is why it is important for them to push on but the build up of the oil reserves among those who are not part of the production cut agreement is not helping matters at all and this is the reason for the oil prices to continue under pressure.

Silver prices also continue to consolidate in line with what gold is doing and their short term direction will be given by the FOMC meeting minutes later on in the week. Till then, it continues to struggle to push through 18.00.