Gold Prices Stabilise on Low Liquidity

Gold prices have staged a recovery over the last 24 hours on the lines of that which we had explained in our forecast yesterday. The gold prices have been moving along expected lines over the last few days as the prices broke through the 1240 region a few days back and made the expected move towards 1220 on the back of a recovery in the dollar value. The dollar has recovered against almost all the instruments and the effect of that is being felt in the gold prices as well. After falling through to 1220, which is a region of strong support and which has seen the prices bounce repeatedly from there over the last few months, we are seeing another bounce in the prices as of this writing as the prices trade above 1225.

Gold Prices Stable for Now

We are not very sure of how long this bounce is likely to last and we expect the gold prices to continue to be under pressure during the course of the day and the region around 1220 to come under pressure again today and in the short term. We have the FOMC minutes releasing later in the day today and the market would be looking at it closely for hints of when the next rate hike is likely to be.  A hawkish minutes could further spur the dollar recovery and push the gold prices lower. It is indeed ironical that over the last few days, the gold prices have fallen when the dollar was weak and it continues to fall when the dollar is strong. We are seeing a change in market dynamics as investors pull out funds from the safe assets like gold and invest them into interest rates, bonds and currencies in the hope of better yields.

Oil prices also continue to move higher over the last 24 hours though, with the US on holiday on account of Independence Day, the volatility and the liquidity was very less and the prices only just managed to move over $47 as of this writing. As we have been mentioning repeatedly, with the tension in the Middle East continuing unabated, the oil prices have received a well needed boost and the latest round of bullishness can be put down to that as all the inventory concerns have been put to rest as of now. As long as the tension lasts, the bullishness is likely to continue and any correction in the prices should be viewed as an opportunity to go long on the oil prices.

Silver has also been consolidating and ranging near its lows over the past 24 hours and though it might bounce slightly, we expect the silver prices to follow the trend of the gold prices and continue to trade weakly in the short term.