Gold Remains Stable As Market is Unsure

Gold prices continued to consolidate and range at the highs of its large range as the market seemed a bit confused on which direction it should be taking. The dollar continued to show its weakness and though it gained for the first half of the day, it could not hold on to its gains for long and it slipped during the second half of the day which helped the gold prices to recover back to the top of their range towards the US session. There does not seem to be any specific fundamental reason for the dollar to strengthen or weaken during the course of the day but we believe that it just shows the amount of fear and risk prevailing in the markets that the investors and traders are just too scared to hold on to any specific trade for too long in the fear that it might get reversed quickly. That is why we have been seeing the day traders rule the roost moving the prices here and there and the investors and the long term traders watch from the sidelines unable to decide which side to take. As far as gold is concerned, the uptrend has been clear for the past few weeks as it seems to be the only instrument that has been consistently performing well against the dollar as the dollar weakness and the global fears have led the funds to be driven towards gold looking for safety and decent returns and we expect this to continue in the short term.

Oil prices fell by more than half a dollar due to the gain in the strength of the dollar and also due to continuing concerns about the oil production cut agreement. Though the agreement has been proceeding fine, we find that the North American producers, who are not part of the deal, continue to produce a lot of oil which has kept the oil reserves very high and this has ensured that the supply is always large, despite the production cut. The data coming through also confirms this and hence the oil prices have either been rock solid or been on a weak wicket and have not been able to make much progress over the past 5-6 weeks.

Silver prices have also been consolidating over the last 24 hours in line with what gold has been doing and as we have been repeatedly mentioning, this is set to continue in the short term.