Gold Prices Continue to Fall Amidst Dollar Recovery

Gold prices continued to correct over the last 24 hours after having made highs of the year just a day earlier. The correction has so far caused the prices to fall by over $20 and the prices continue to remain weak as of this trading. Just a couple of days back, we saw the gold prices push through 1325 due to the increase in global risk and the weakness of the dollar but after spending a brief while there, we have been seeing the prices correct lower. The impetus for the latest round of correction has been the recovery in the dollar strength and also the global stock markets as well. The risks and the uncertainties surrounding North Korea have receded for now and the stock markets have been heaving a sigh of relief and seeing some strong buying going on. This has placed a lot of pressure on the gold prices though it is not sure how long this recovery is going to last.

Gold Likely to Bounce

On the other day, we saw the ADP and the Prelim GDP data from the US yesterday, come in much stronger than expected and this has raised hopes that the Fed would be inclined to hike the rates in the near future. This has led to a round of dollar buying which has placed additional pressure on the gold prices and that is the reason why we are seeing the gold prices floundering near the support region at 1300 as of this writing. We believe that this region should lend some good support for today and we could see a decent bounce from this region during the course of the day today, as the market awaits the NFP data tomorrow.

Oil prices continue to trade in a weak manner as the demand for crude oil is yet to pick up in the US. The cyclone there has led to the shut down of many refineries and this has affected the demand for crude oil and the price correction that we are seeing right now, is an effect of that. As we had mentioned in our forecast yesterday, we view this correction as only a temporary phenomenon and we expect the prices to recover once the refineries come online in a matter of a few days. Till then, the oil prices should continue to consolidate near their range lows.

Silver prices have also been correcting lower over the last 24 hours due to the strong data from the US and the subsiding of global risk which has led to the pushing of funds from the silver market to the stock market.