Gold Falls Towards Support

The gold prices continue to range between 1240 and 1260 over the last few days as it remains largely unaffected by the weakness in the dollar. The dollar weakness and the drop in the stock markets should have led the prices higher through 1260 by now but with the volatility and the returns seemingly higher in other instruments like the euro and the pound, the funds seem to be moving there rather than into gold.

Gold Prices Consolidate

This is one of the main reasons for the gold prices to consolidate and range during the last few days. The euro has also managed to strengthen across the board and this has helped to keep the bid under the gold prices. Also, we are about to see a slight increases in taxes on gold purchases as India switches to the GST regime of taxation and with India being one of the largest consumers of gold in the world, this has led to a bit of uncertainty on how the demand would be, for gold, once the new tax regime comes into place on June 1.

The general expectation is that there would not be too much changes in the demand as the change in tax is very little but the market is still a bit uncertain and that is why we are seeing some pressure on the gold prices and the prices have fallen near the support region of 1240 as a result.  We expect the prices to continue to remain under pressure in the short term as the fears and uncertainty persist. As mentioned several times over, a break through 1240 should open up 1220 as the target.

There has been a slight pause in the steady rise of the oil prices as the bulls seemed to take a rest. We have been seeing the oil prices rising steadily since the beginning of the week and the prices have risen by over 7% during this time and the prices are trading comfortably above the $45 region as of this writing. As mentioned earlier, it is likely that we have seen the bottom in the oil prices and so any move back towards the range lows should be viewed as an opportunity to go long.

Silver prices also corrected towards the $16.5 region over the course of the alast 24 hours and they are likely to consolidate and range between the $16 and $17 region in the short term as the market awaits the new week and the new month.