Gold Prices Bounce on Increased Risk

Gold prices had a mixed day yesterday as the prices broke through the 1300 region on the back of dollar strength following the hawkish Fed announcement and this move carried the prices through towards the support region at 1285. At that point of time, the prices looked very weak and the market feared that the gold prices might move even lower but none of that happened as the prices have since bounced higher through the 1290 region. The heightened tension in the Korean region has once again helped to support the gold prices as the US and North Korea continue to trade charges and threaten each other for now.

Gold Prices Correct to Support And Then Bounce

This clearly increases the global risk and we are likely to see the gold prices well bid under such circumstances. The dollar also seems to be unable to hold on to gains for more than a day and this is also helping the gold prices to move higher in the short and medium term as well. Though we have had bouts of dollar strength, this has not been enough to keep the bid under the dollar. Even the hawkish Fed announcement that they are keeping the rate hike door clearly open for this year has not done much to sustain the dollar strength and we are seeing it move lower across the board over the last 12 hours or so. This has helped the gold prices to move above 1295 and the prices are at a cross road as far as the short term is concerned.

Oil prices continued to trade in a strong and steady manner and the waxing and the waning of the dollar strength seems to have little effect on the oil prices. Also, some of the OPEC and non-OPEC producers are meeting today and a part of the market believes that they would decide on the range and depth of the oil production cut once again and would also decide to extend it. But the agenda for the meeting does not contain any such item and it is more a compliance meeting than anything. The outcome of the meeting could leave a part of the market disappointed but that is unlikely to have much of an impact on the oil prices.

Silver prices have also been choppy over the last 24 hours or so as the market comes to terms with a choppy dollar and this choppiness is also likely to affect the silver market. We might see the silver prices consolidate on either side of $17 during the course of the day.