Gold Prices Continue Higher on Weak Dollar

Gold prices moved higher during Friday and today as well, though for vastly different reasons. The underlying bullishness in the gold instrument is clear for everyone to see but there have been periods of correction in between which has got the prices moving lower at those times and hence the traders need to be careful and not trust the uptrend quite blindly. The gold prices have been helped higher by the weakness in the dollar and also well supported by the global risks and uncertainties as well.

Gold Gains on Increased Tension as Well

On Friday, the gold prices consolidated during the early half of the day as the market awaited the NFP and the wages data from the US later in the day. Both of these pieces of data came in weaker than expected and this helped the gold prices to move back towards the highs of its range but it could not break through that region. The reason for that could be attributed to the fact that the NFP and wages data generally tend to be weak during the month of August due to some quirks in its calculation. Hence a part of the market was indeed expecting the data to be weaker and refused to read too much into it and that is why the reaction to the bad data was quite muted, by gold standards.

On the other hand, there has been another round of missile testing from both North and South Korea which has increased global tension and this has helped to move the gold prices higher as of this morning. The prices broke through the 1330 region and trades above it as of this writing.

Oil prices also continued to trade in a strong manner and the slight weakness that was seen in the early half of Friday led to a recovery later in the day and it continues to trade strongly as of this morning. We expect the oil prices to continue its recovery and move towards the $50 in a strong and steady manner in the short and medium term. As we had mentioned in our forecasts, the correction in the oil prices are likely to be only temporary and should give way to bullishness.

Like gold, the silver prices also continued to move up during the course of Friday and today on the back of dollar weakness and also due to the increase in the global tension and risks and are likely to follow the gold prices in the short term.