Gold Prices Fall, Bull Run Looking Doubtful

We had mentioned in our forecasts last week that it was important for the traders to watch out for the weekly close of the gold prices to see whether the current bull run would continue or whether any doubts would be sowed in the minds of the buyers. This was especially true on Friday as we initially saw the gold prices burst higher on the back of increased risk caused by the bombing of the Syrian airbase by the US. This led to the gold prices breaking through the highs of the range and moving as far high as 1266 but even then, we had mentioned that it was important to watch for the close and also to see whether the bulls are able to hang on to the gains that they had made.

Gold Prices Back Into Range

This waiting game proved helpful as the gold prices fell back towards the close of Friday as the risks receded somewhat and we also saw the dollar gaining back some of its strength despite a weak NFP. This is the second week in a row that the gold prices have made a run to the upside but fallen back below 1260 and into the region and this kind of price action should be a matter of concern for the bulls. The gold prices continue to trade near the highs but this is more due to the increased risks and fears of the war in Syria getting escalated. This has led the funds to pull out money from the risky assets like the stocks and push them into gold but even when this is happening, we find that the gold prices have found it difficult to break the range highs so far.

If these risks did not exist, we would probably be looking at a large scale correction in the gold prices right now and we have been mentioning this over the last 2 weeks. Unless the gold prices break through the highs of the range and manage to stay above it, the buyers would be exposed to the risk of these prices correcting lower and once this starts to happen, we could see more and more buyers abandoning the ship which could push the gold prices towards 1200.

Oil prices continued to remain steady and buoyant since Friday as it trades just below $53. We expect the oil prices to move back into the range between $53 and $55 and then the oil prices are likely to range within this for the short term. Of course, this is dependent on the incoming data over the next few weeks as we need to continue to see a drop in oil inventory and low production for such prices to be sustainable.

Like the gold prices, the silver prices also fell on Friday as the silver prices found it difficult to push through the range highs and with the growth in the strength of the dollar, the silver prices crashed through $18 and trades below it as of this writing.