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Gold and Silver Begin Their Correction

By:
Colin First
Published: Jan 19, 2017, 07:25 UTC

Gold prices began their correction as we had mentioned in our forecast yesterday. The gold prices had been rising from 1160 and had been showing some good

Gold and Silver Begin Their Correction

Gold prices began their correction as we had mentioned in our forecast yesterday. The gold prices had been rising from 1160 and had been showing some good strength on the back of dollar weakness across the board. We had expected some serious resistance and correction in the 1200 region but the commodity had managed to push through that region and traded above 1210 for a brief while. Yesterday, we had the Fed Chief Yellen stating that if the economic data from the US continues to be strong in the coming months, then the Fed is likely to start hiking rates even more. This helped to shift the focus on the rates hikes and the dollar and away from the global risks and this helped the dollar to gain strength and the gold prices fell towards 1200. We believe that the gold prices are ready for even more correction and we expect the prices to fall towards 1170 in due course of time. We have to watch the price action when it gets there to make sure whether it is a correction of the move up or whether it is a reversal of the prevailing trend before we enter into a trade in either direction.

Gold Hourly
Gold Hourly

Oil prices also had a correction yesterday as the global fears receded and the dollar gained in strength. The oil inventory data scheduled to be released from the US later in the day in likely to be watched with keen interest to see if there is any additional build up of the inventory. Unless other oil producers like North America and Iran cooperate, it would be difficult for the producers to achieve their aim of pushing the oil prices higher towards $60. So far, we have seen that those who are not part of the production cut deal have been using this opportunity to push their supply and inventory higher and this is the reason why the oil prices have not been able to progress further. It is very important that the data in the coming weeks reflect a drop in the production else we could see a large correction in the prices.

Silver prices also underwent a correction in line with what is happening in the gold markets. As we had mentioned, the silver prices have been following the gold prices very closely over the past few weeks and it is likely to continue to do so in the coming weeks as well.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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