Gold Prices Correct Lower on Strong Dollar

As we have been pointing out during many of our forecasts, even on days when gold prices have moved higher, the gold prices continue to be under pressure and are likely to remain so in the near future. The fundamentals seem to be loaded against gold at this point of time and that is why we have been saying that every bounce in the gold prices should be viewed as an opportunity to short gold and it would be futile to go long on gold at this point of time. The cycle of interest rate hikes and strengthening of the dollar is likely to keep the gold prices under pressure during the short and medium term and hence traders would be well served by selling every bounce.

Gold Prices Move Lower

Yesterday, the dollar managed to strengthen across the board on the back of reports that John Taylor could become the next Fed Chief. The reports said that Trump had held a secret vote within his party and that they had voted for Taylor. He is known to be a hawk and is likely to bring in several interest rates quickly and this is what the market also believes. So, any news on his appointment is likely to boost the dollar and this boost led to the weakening of gold prices. The market has not yet aggressively started to price in his appointment but once the announcement comes in, if and when it does, it would lead to a large rally in the dollar which would then push the gold prices even lower.

Oil prices move slightly higher yesterday as the market awaits the oil inventory data from the US later on in the day. The market is likely to be choppy for the time being as it approaches the $53 region but what should give a lot of heart for the bulls is the fact that they have managed to hold the prices above $52 over the last few days and this augurs well for the bullish run to continue in the short term and push the oil prices towards the $55 medium term target.

Silver prices have also followed the gold prices in correcting lower over the last 24 hours as the prices now trade below the $17 region as of this writing. Like gold, the silver prices are also expected to be weak in the short to medium term as the dollar gains in strength.