Gold Prices Shoot Higher on Weak Dollar and Global Cues

Gold prices finally shot through the roof yesterday on the back of weakness in the dollar and an increase in geopolitical tensions once again. This move was a long time coming and we had even mentioned about the upmove in many of our forecasts We always felt that it was only a matter of time and the fact that the gold prices did not correct too much even during periods of strength in the dollar was indication enough that there was a lot of buying going on in the instrument. This move has happened even though the London market has not got a chance to react to the speeches of Yellen and Draghi as yet, and it remains to be seen how the market is going to react when it opens today.

Gold Likely to Move Even Higher

Yellen did not choose to offer any kind of support to the falling dollar in her speech on Friday and this was a clear signal to the markets to begin their next round of selling in the dollar. This helped to push the gold prices through the strong resistance region at around the 1300 region and the prices moved as far high as 1310 during the course of trading yesterday. Also, late in the night, we have news of another round of missile testing by North Korea and this has increased the global risk and uncertainty which has further fueled the upmove in the gold prices. The prices are likely to continue to trade in a strong manner in the short and medium term as the upward pressure on the gold prices is likely to persist due to the weakness in the dollar.

In contrast to gold, the oil prices fell hard yesterday as concerns over demand continued to haunt the oil markets. With the Cyclone Harvey hitting Texas very hard, it is likely that a lot of refineries in that region are shut down and this is going to hit the demand for crude oil in the short term. This was termed as the main reason for the dip in oil prices but we believe in the medium term bullishness in the oil markets and we expect the oil prices to bounce back sooner rather than later.

The silver prices also received a boost to rising global risk and the weakness in the dollar and they now trade just below the $17.5 and it looks good to reach the $18 mark in the short term.