Gold In Critical Region, Will It Rise or Fall?

Gold prices have managed to reach our target region and it is here that the price action and the events would be crucial in determining the next course of the prices for the short term. We had mentioned yesterday that the prices are likely to reach the $1242 region and that once they reach here, they are likely to face a lot of selling. The bulls have done well so far in pushing the gold prices higher despite the fact that they were in the doldrums last week and they were helped in this effort by the dollar sellers who have made full use of the weakness in the dollar.

Gold Consolidates

This weakness has helped the gold bears forget the tapering talk from the ECB and the rate hike talk from the BOE and the rising yields and focus purely on the dollar fall and this has helped the gold prices recover so far. Now, we have to see whether the recovery will be able to continue in the near future or whether the dollar would be able to gain some footing which will lead to a correction in the gold prices in the short term. If the gold bulls manage to push through this region, then we should be looking at $1270 as the next likely target while a correction here could open up $1220 once again.

Oil prices continued to consolidate and trade within a tight range as the markets await the oil inventory data later today. The API release of the data yesterday showed a bigger build than expected and if this is confirmed in the news later today, then we should see the oil prices weaken and this might provide another opportunity for the bulls to snap up some more oil contracts in the hope that the fall would be just a correction in the medium term. The crisis in the Middle East is in a kind of stalemate so far and this has helped to keep the oil prices within a strict range.

Silver prices have been in a consolidation mode over the last 24 hours after having risen over the last week or so. We have to wait and see whether the consolidation is just a rest before the next leg up or whether it would lead to a correction in the prices.