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Gold Prices Drop as Risks Recede

By:
Colin First
Published: Sep 11, 2017, 04:25 UTC

Gold prices traded in a very strong manner on Friday as they broke through the 1350 region and also ended the day in a bullish manner. Much of the latest

Gold Monday

Gold prices traded in a very strong manner on Friday as they broke through the 1350 region and also ended the day in a bullish manner. Much of the latest leg in the uptrend for the gold prices was due to the fear in the markets that North Korea might launch a missile to mark its National Day which fell on Saturday and this seemed to spook the markets which proceeded to push more and more funds into safe havens like gold and this helped the gold prices to continue to move higher. A combination of uncertainty and risk along with the weakness in the dollar has been just the fuel needed by the gold bulls to push the prices higher in the short term.

Gold Prices Move Back to Support

But, as it turned out, there were no missiles launched in any part of the world over the weekend and this helped to bring the risks under control all over the world. This buoyed the stock markets and led to a withdrawal of funds invested in safe havens like gold and the yen and we saw the gold prices drop back with a gap to open the trading for today. It is now trading near the support region of 1337 as of this writing and we might see an attempt to close the weekend gap in the short term. For now, we can expect some consolidation in the gold prices with a bearish bias as the European and US markets open and they would be buoyed by the absence of these risks over the weekend and this should place some pressure on the gold prices.

Gold Hourly
Gold Hourly

Oil prices dropped lower on Friday on demand concerns, something which we had mentioned in our forecasts for Friday. We had said that the Hurricane Irma is likely to shut down some rigs and refineries in the US and this was likely to affect both the demand and the supply of oil. We had also said that, just like the effect of Hurricane Harvey on the oil prices, this would also lead to a drop in the oil prices which was likely to be temporary and once the weather cleared, we should see the demand and supply back to normal pretty quickly and this would help the oil prices to recover. Though the prices fell on Friday, they have been recovering this morning as the Saudis have hinted at an extension of the production cut.

Silver prices also fell as of this morning and opened with a gap down below $18 as the lack of tension in the Korean region over the weekend seemed to have calmed the markets down and led to a round of selling in the safe haven instruments.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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