Gold Prices Threaten to Break Range

Gold prices rose higher during the course of the day yesterday on the back of dollar weakness that was seen across the board. The gold prices were floundering at around the 1270 region for much of the day and it looked as though it would break down if the FOMC meeting minutes was hawkish as was expected by the markets. But the gold prices were saved by 2 pieces of news from the US which led to a large bout of selling in the dollar. The first piece of news was the disbanding of the trade and policy council by Trump as most of the members resigned in protest over the comments of Trump regarding the violence in Charlottsville. This led to a bout of weakening in the dollar as it continued the impression that this government of Trump is likely to struggle to get any kind of good work done in the medium and long term.

Gold Moves Higher on weak Dollar

The next was the FOMC meeting minutes where the Fed failed to support the dollar once again. They did not give out any timeline for the balance sheet restructuring or for the next rate hike and they continued their policy of allowing the dollar to be weak across the board and left it to the mercy of the markets. This led to another larger round of dollar selling which helped the gold prices to recover from their lows to move above 1280 and it currently rests near the range highs which could be a crucial price region in the short and medium term. The range between 1287 to 1292 has been containing the gold prices since the beginning of the year and it has come increasingly under pressure in recent times. If this leads to a breakout, then we are likely to see the prices move towards 1300 and then on to 1310 in the short term.

Oil prices continued their correction yesterday despite the weakness in the dollar and also despite a larger than expected draw in the oil inventory data from the US. The lack of demand from some major economies like China and concerns over supply continue to haunt the oil markets and now the bull run is under some serious threat and it is likely to take a lot of effort for the prices to move ack above $50 which is the minimum price range that the OPEC producers would be looking for, to sustain their economy.

Silver prices also shot higher yesterday on the back of a weak dollar and they are now back trading aove $17 as of this writing. We expect this bullish leg to run some more in the short term.