Gold Prices Move Higher on Dollar Weakness

Gold prices moved higher on Friday on the back of the weak dollar. The dollar was on the backfoot all across the board since late Friday and this has been utilised by the gold bulls in pushing the prices through 1220 and back towards the 1230 region. It seemed that the game was over for the gold bulls for most of last week as the instrument weakened towards the 1200 region after having broken through the crucial 1220 region. The market was expected to weaken further and it was also expected that the dollar would be the driver of the fall as the market was looking towards economic data from the US and the speeches from Yellen to provide some impetus to the dollar. But none of that seemed to happen as Yellen chose not to sound hawkish on the dollar while the CPI and the retail sales data from the US continued to be very week.

Gold Likely to be Choppy

The dollar bulls would have expected some respite from the dollar beating going on in the markets when the NFP beat the expectations and they would have hoped for this economic data boost to continue through in the subsequent weeks. This was especially important for the dollar as the Fed had made it clear that further rate hikes would be dependent on the incoming data. But with the failure in the retail sales and CPI data, the dollar bulls are back to square one and the gold bulls have been able to get out of the trouble, atleast for the time being. On the other hand, the yields from the other countries and the bonds continue to be tempting for the investors and so we cannot rule out further weakness in gold prices.

Oil prices continue their recovery, in line with what we have been saying over the past few weeks. Though the progress has been very slow, it has been steady at best and has provided ample opportunities for the investors to get in on their longs. We believe that the journey ahead will be long and slow but we believe that we should be able to crawl above $50 and head towards $60 in due course of time as the crisis in the Middle East does not show any signs of waning.

Silver prices have also managed to recover above $16 after a battle of many days and this augurs well for the silver bulls and they are likely to push the silver prices higher in the short term.