Gold Prices Continue Recovery

Gold prices continued their recovery over the last 24 hours as the prices moved through 1250 and has managed to stay above that mark for most of the day yesterday. The markets have been quiet over this time and it says something about the volatility in the markets when gold prices are one of the biggest movers of the day despite moving by less than $10 during that period. We had mentioned of a possible recover in the prices when the prices were at the lows of their range at 1240 and we had mentioned 1250 as one of the short term targets. This has been achieved on the back of some dollar weakness and we believe that there may still be some fuel left in the tank which could push the prices even higher. If that is going to happen, then 1260 could be the next target.

Gold Prices Targeting 1260

But with the dollar holding steady and the Fed continuing to be hawkish, we do not expect this bounce in the gold prices to last much longer beyond 1260. Of course, the key here would be the incoming data from the US as the Fed has made it clear that all hikes would be based off the incoming data. The data has been weak over the last few weeks and this could push the timelines for the next rate hike if such trends continue. For now, the Fed has chosen to ignore the weak data but it would be impossible for it to continue to do so if the data continues to be weak in the times ahead. Coming to think of it, the delay in the rate hikes and weak data could be the only ones that could weaken the dollar and save the gold prices in the short and medium term.

Oil prices recovered a bit during the course of the day yesterday but this bounce is likely to be sold into in the short term. The close will be key today as unless we break above the November low today, we are likely to be staring at $40 and below in the short term as the downtrend would continue. The bulls would be hoping for some respite from somewhere to help stem this tide but so far, the situation looks bleak.

Silver prices have also managed to recover above $16.5 and they continue to gain in the short term as the investors push some of their funds back into the safe assets like gold and silver in the absence of specific drivers for risky assets like the stock markets.