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Gold Prices Continue Chopping Near Range Highs

By:
Colin First
Updated: May 25, 2017, 07:41 UTC

Gold prices are back at their range highs as the dollar weakened across the board ever since the release of the FOMC minutes late yesterday. The minutes

Gold

Gold prices are back at their range highs as the dollar weakened across the board ever since the release of the FOMC minutes late yesterday. The minutes were not as hawkish as the markets had expected and though it kept open the door for a rate hike in June, it was dependent on the rider that the incoming data would influence the rate hike decision a great deal. This was interpreted as a dovish minutes by the markets and the dollar has been sold off since then. Gold has been one of the instruments that has been able to utilise the weakness of the dollar fully, as and when it arises and thats what we have seen this morning as the prices moved towards the 1260 region which is likely to be a key region for the bullish run to continue.

Gold in Crucial Region

We had mentioned that the bulls need to break through the 1260-65 region to have any hope of further progress and if this region is indeed broken, then we should see the gold prices move towards the 1295 region. We expect to see some consolidation at these range highs as the market decide on whether the minutes were indeed dovish and the markets now await the next direction from somewhere. As is usual for the period leading up to the month end, the volatility is likely to be low as the traders position themselves for the upcoming news in the first week of the new month.

Gold Hourly
Gold Hourly

Oil prices continued to trade higher as the oil inventory data from the US showed a much bigger draw of 4.4M barrels against the expected value of 2.4M barrels. This did not affect the prices by much and reports said that Russia confirmed that the production cut that is likely to be announced would not be much higher than what the markets expect. This presents a confusing picture on what we expect from the OPEC meeting today and hence the investors chose to tread a careful path and not commit themselves in either direction at this point of time. All eyes will be on the OPEC meeting later today and the reports and the announcements following that. Any kind of positive developments in terms of greater and longer production cuts are likely to push the prices towards $55 in the short term.

Silver prices also shot higher through the $17 region over the last 24 hours as the prices were buoyed by the weakness in the dollar. The prices are likely to continue in a strong manner in the short term and it would be useful to keep an eye on the gold prices for further direction.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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