Gold Prices Correct Back Into Support Region

The gold prices tried to break higher during the course of the day yesterday but were promptly beaten back by a lot of selling as the dollar has managed to recover across the board late in the day yesterday and that recovery continues as of this morning as well. The prices moved beyond the 1270 region and for a brief while, it looked as though the prices would move much higher pretty quickly and move beyond 1280 in a day or two. But it was the first day of the month and probably the bulls did not want to push it too hard and thats why they seemed to hold back and this gave a chance for the dollar to get back. There was not much by way of data to support the dollar but still the anticipation of all the news later on in the week and just the fear that the dollar might be too oversold already was enough for traders to take profits and push the gold prices lower.

Gold Likely to Bounce

Gold prices continue to trade just above the 1262 region as of this writing and we do not expect a break of this region for today. We have the ADP employment data to be released from the US later on in the day and this is considered as a precursor to the NFP that will be released on Friday. The dollar bulls would be looking at this data to see if it can help with the turnaround that is happening right now and if the data comes out strong, we can safely expect the gold prices to test the 1262 region today.

We have been mentioning in our forecasts over the last 2 days that the oil prices are likely to face a lot of selling in the region between $50 and $52 and hence we are likely to see some correction from this region and this is what we have seen over the last 24 hours. After consolidating for much of the day yesterday, we have seen the prices fall as the inventory data was released privately over API and this showed a much larger build in the inventory in the US. This was a surprise and the oil contracts sold off though the actual inventory release is scheduled to be done only later in the day today. We expect this correction to be bought into and we expect the uptrend to continue.

Silver prices also corrected, in line with the gold prices, and the prices trade just above the $16.5 region which should serve as good support.