Gold Prices Shoot Higher Through 1290 on FOMC Dovishness

Gold prices continued to remain buoyant all through the day yesterday as the dollar was weakened by the dovish FOMC minutes. The gold bulls have been having some good time over the last few days as the weakness in the dollar since the NFP data release last Friday has helped to the push the gold prices higher. From the depths of 1260 just following the release of the data, the prices now trade in the 1295 region as of this writing and continue to look strong for the short term as well. With the incoming data turning out to be weak, the dollar bulls were looking towards the FOMC for some support and hawkishness but they got neither. The minutes continued to give a grim and general commentary of the economy with no specific timelines for the next rate hike.

FOMC Pushes Dollar on the Backfoot

This was construed as dovish by the markets and the dollar has been in a sell off mode since then which has pushed the gold prices higher and higher. This latest move up seems to be down to purely dollar weakness as the stock markets continue to do well in the absence of further risks from the Korean region. Looking ahead to the rest of the day, we have the PPI data from the US and this probably provides one last opportunity for the dollar bulls to make a stand and also gives an opportunity for the market to continue to believe that there is still a rate hike from the Fed later in the year.

Oil prices managed to finish the day steady despite some weak inventory data as far as the bulls are concerned. As we have been mentioning in our forecasts over the last couple of weeks, the prices are very close to a strong resistance region between $53 and $55 and without the help of some specific fundamentals, the bulls are going to find it difficult to gather enough momentum to push the prices higher through this region. We will have to wait and see whether that push comes from.

Silver prices have also been trading in a strong manner over the last 24 hours, in line with the gold prices and also due to the weakness in the dollar. The prices now trade clearly above the $17 region and are likely to remain well bid for today also.