Gold Drops as Oil Shoots Higher

Colin First
Gold Monday

Gold prices dropped lower during the course of trading on Friday and continue to trade in a weak manner as of this morning as well. The prices have been affected by the growth in the strength of the dollar that has set in since the release of the NFP employment data on Friday. The data for the current month came in weaker than expected but this was compensated by the revision upwards of the jobs data from the previous month. A combination of these helped the dollar to hold steady. The rate hike in December from the Fed is still open to question as the Fed continues to remain non-committal about it but the market seems to be slowly pricing in the rate hike after every piece of data.

Gold Prices Drop Through 1270

The market seems to feel that as long as the data is not very bad and way off the expectations, it still gives the Fed enough room to hike in December and that is what it has been pricing in after each passing data. This has added a lot of pressure on the prices of gold and that is the reason why we are seeing the gold prices trade below the 1270 region as of this writing. As we have been pointing out in many of our forecasts, we believe that the gold prices would continue to weaken in the medium term as the world markets adjust themselves to the new regime of rate hikes. This will be a new and large cycle that is likely to exist in the markets over the next couple of years as the various central banks begin to hike rates.

Gold Hourly

Oil prices have shot higher as of this morning due to the reports from Saudi Arabia over the weekend that said that the ruling Premier over there has ordered the arrest of several top leaders in that country as he begins to tighten grip on the power. This has led to uncertainty in the oil rick kingdom and this uncertainty has passed on to the oil markets as this has led to doubts on whether it would be able to manage the production and supply levels. This has helped the oil prices to shoot through the $55 region as the market comes to terms with the news and the prices are likely to continue to remain at high levels  in the short term.

Silver prices have also dropped lower through the $17 region as the market comes to terms with the stronger dollar. They are likely to continue to trade weakly in the short term.

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