Oil Begins Its Next Bullish Leg but till Where?

Gold prices continued to consolidate near their range lows as the US yields and the looming Fed rate hike continued to weigh on the gold prices. We have been mentioning that the gold prices would continue to be subdued in the short and medium term as the US hikes its interest rates and the demand from the Asian market begins to dry up slowly as more capital outflow controls kick in, in these countries. It is going to become more and more difficult to keep the gold prices propped up in such a situation and we should be seeing gold drop down slowly with corrections interspersed in between. We expect that any kind of a bounce in gold prices is likely to be limited by the resistance that is present around the 1205 region and this region is where we will be looking to place our sells.

Oil prices began their next part of the bullish run which we have been specifying over the past couple of days. We had mentioned that the oil prices are likely to reach around $52 and then we will be witnessing a correction towards $50 as the some profit taking will come in and the market takes a breather before the next bull leg and thats what we have been seeing. The price did stall at around $52 and then we had a correction towards $50 and yesterday, we saw the oil prices shoot back above $51 as the market begins to gear up for the meeting between the OPEC and non-OPEC producers that will be held within the next few days to discuss and agree on the details of the production cuts. If this deal comes through, then we should see the oil prices go up even more. But the real deal will come in only when the agreement kicks in during 2017 and it remains to be seen how the implementation is done and what effect it will have on the supply and demand. We believe that though oil prices will have a bullish run in the short term, we expect the oil prices to come back down in the medium term as problems creep up in implementation and monitoring.

Silver prices, like gold, continued to range and consolidate within a small range for most of yesterday as it also waits for the Fed rate hikes and further hikes in 2017. We believe that silver prices will also be under pressure from the dollar strength but will continue to outperform gold in the short and medium term.