Gold Prices Likely in Large Weakening Cycle

Gold prices continued to move lower during the course of the day on Friday and as of today morning as well. This is likely to continue in the short and medium term as well as the risks begin to subside and the stock markets begin to move ahead in a steady and confident manner. We have been seeing the US stock markets making new highs almost on a daily basis and this is likely to weigh on the gold prices as well. This would lead to funds moving from the safe havens like gold and silver to the stock markets and with the Fed also indicating that it is ready to hike the interest rates in December as long as the data supports it, this would also lead to the moving of funds into the US in the hope of better returns.

Gold Prices Move Lower

Gold prices have been moving higher and being well bid over the past several months as the interest rates in several parts of the world were very low and hence large investors felt that they are likely to get better returns if they invest in gold than moving funds into the interest rate or bond markets in various countries. But now, we are seeing that cycle coming to and end as many countries, including the US and Canada, have already started their cycle of hiking rates and many other countries, like the UK, are almost ready to join that. Considering these events, we could be in for a huge cycle of weakening in the gold prices in the medium term. Of course, events like rise in global risks could lead to bounces in the gold price but these are likely to be few and short lived.

Oil prices continued to trade in a steady manner but comfortably above $51 on Friday and as of today as well. There have been no fundamental news over the last few days to push the prices in either direction and that is the reason for this consolidation. With the trend up but with the prices close to the strong resistance region between $53 and $55, it is only natural for the price rise to slow down at this point till it gathers momentum.

Silver prices have also been behaving similar to the gold prices as they continue to move down and now trade close to the $16.5 region. Like the gold prices, they are likely to remain weak in the short and medium term as well as funds flow out of the silver market and into the stock and bond markets.