Gold Prices Shoot Higher on Higher Risk

The gold price shot higher yesterday, once again on the back of increased global risks due to North Korea. They have begun to make it a habit over the last couple of months or so to perform one kind of missile testing or the other and this is causing the global risks and tension to increase and makes the gold prices jump by around $20 each time and causes the stock markets to crash. No one even knows how strong and reliable these tests are but one can certainly say that they are doing enough to rile up the US and their neighbours in the Asian region including South Korea and Japan. With China supplying a lot of good to North Korea, it has also become an indirect battle between the US and China and this is making matters worse.

Gold Continues to Rise

This is why the fact that funds are flocking to safe havens like gold and silver is no surprise and we saw more of the same yesterday. The holiday in the US tended to take away a lot of liquidity from the markets but this did not stop the gold prices from shooting through 1330 and it managed to stay near the highs of its range for the whole of the day yesterday. Progress in the prices might be a little difficult from here on as the risks are bound to fade within a day or two and normalcy is likely to be restored during that time. When that happens, the stock markets begin to recover and the funds begin to flow from gold to the stock markets. So, it remains to be seen how long the gains in the gold prices are likely to hold in the short term.

Oil prices traded within a tight range for the whole of yesterday, primarily due to the lack of liquidity in the markets as the US had a holiday yesterday. But the prices continued to cling on to their highs and close the day near the highs which should augur well for the bulls. We continue to be convinced about the bullishness in the oil prices and view every deep correction in the prices as an opportunity to add to the longs in the oil contracts. We believe that the oil prices would make steady progress towards $50 and beyond.

Silver prices also followed the gold prices higher and continued to stick on to their highs on the back of rise in global risks and are now within striking distance of their first target of $18 but it is likely to be a challenge to break through this region for now.