Gold Prices End the Day Unchanged But More to Come

Gold prices began the day yesterday in a brisk manner as they shot through to the 1325 region on the back of increase in global risk due to the standoff between North Korea and the US. Japan woke up to the news of missiles being tested near its region by North Korea and this escalated the tensions in the region which led to moving of funds to safe havens like gold, silver and yen. This helped the gold prices move higher and this strong trading continued during the London session as well as the traders in that market got their first opportunity to react to the speeches from Yellen and Draghi since Friday. This pushed the dollar on the backfoot and this helped the gold prices to continue to trade near their range highs.

Gold Prices Back to Support

But as the day wore on, the effect of the threat from North Korea began to wear off slowly and the threat also seemed to have been handled in a much better and diplomatic manner as opposed to the fire and brimstone approach that the US and other countries seemed to follow during the previous times. This helped the dollar to recover and the global risk to subside which led to a correction in the gold prices and it ended the day without much change. It continues to trade in a weak manner as of this morning but we believe that this is only a correction of the upmove over the last couple of days and we are likely to see the gold prices continue higher in the short term. Expect some buying to come near the 1308 region which should hold up the prices for the day.

Oil prices also continued to trade in a weak manner as the Hurricane in the US continued to ravage Houston. This has led to disruption in the demand for crude oil as more and more refineries continue to be shut down across the region. With the demand for crude oil beginning to dry up, we are likely to see the oil prices begin to go down and continue to remain under pressure. But as mentioned yesterday, this is likely to be a temporary phenomenon as once the storm blows over, we should see the refineries getting back up and the demand also getting back to normal. The oil inventory data later in the day from the US will also tell us about how much store the US has and this is likely to affect the oil prices as well.

Silver prices also corrected slightly lower over the last 24 hours but like gold, silver is also likely to be buoyant in the short term as the dollar is clearly on the backfoot as we head into the new month.