Gold Prices Continue Their Decline

Gold prices continued to fall for another day yesterday and the fall does not seem to have an end in sight as end. During the course of this fall, the prices have broken through the strong support region at around 1248 and this opens the way for the gold prices to move towards the next support region which is around 1220 which we believe would be the target for the bears in the short term. We had warned of this possibility in our forecasts last week, ever since the Fed hiked rates and also kept the door open for further rate hikes this year. Since that time, we have been seeing the dollar gaining in strength across the board and gold prices have tended to react to dollar strength and weakness much faster than other instruments and that is why we have been seeing the prices fall from their highs over the 1280 region, just a week back, to below 1250 as of now.

Gold Falls Through Support

Yesterday, the prices reached as low as the 1241 region before a small correction has set it which has helped it to keep afloat as of now. We do not see the prices moving above 1250 in this leg and we believe that the prices would continue to keep moving lower in the short term. The stock markets have also been doing really well over the last week or so, around the world, and this has led to a risk on mode in the markets which has in turn led the investors to pull out their investments from gold and into the stock markets in the hope of better returns.

Oil prices also dropped lower yesterday as there were some concerns over the supply of oil with the crisis in the Middle East not yet being close to getting resolved. This pushed the oil prices below $43 for a brief while and though it has recovered since then, it continues to trade weakly and the bulls would hope that the oil inventory data coming in today would give them some news to cheer about and help push the oil prices higher.

Silver prices, in line with the gold prices, have been trading quite weakly as well and they continue to look towards the $16 region as their first target in the short term. With the dollar gaining in strength and with the risk on mode in the markets, it is only natural for the silver prices to suffer and this will continue in the short term.