Oil Corrects a Little, What’s Next ?

Gold prices continued to range and consolidate through the day as the general softness in the dollar helped to keep the gold prices afloat. It did have a brief sojourn towards 1150 during the early morning trading yesterday but has since recovered and sits above 1170 as of this writing. As we have been mentioning over the past few days, we expect the gold prices to continue to be under pressure as the Fed meeting looms large with the markets expecting a rate hike. Also, continuing good data from the US keeps alive the hopes of further hikes from the Fed in 2017 and this will also keep the gold prices under pressure. Another factor is the drying up of demand from the gold consumers in India and China as they choose to circulate the gold available internally in their country and thus cut capital outflows. So, we do not expect any bounces to break through 1205 and gold prices will continue to be under pressure in the short and medium term as well.

As we had predicted in our forecast yesterday, oil prices did try to break through the $52-$53 region yesterday but they were promptly pushed back by the sellers sitting in the region and now we can be looking at some more correction in the oil prices, towards the $50 mark. If the prices do get there, then it might be an opportunity for the buyers to load their longs in this region for the next leg of the uptrend. For now, it is key to sit on the sidelines and watch the action as the prices are too high and too volatile to make a safe entry on either side. An ideal action would be a correction to $49 before the next leg takes it up to the mid 50s but we need to wait and see how it all pans out.

Like gold, silver prices also continued to range and consolidate through the day and there is not much action happening in the commodity markets as they follow the general market themes. There is no major news from the US or the Euro regions for today and so we can expect some more consolidation for the rest of the day as the market prepares itself for the next round of action. Traders would be well advised to wait on the sidelines as far as the commodities are concerned as all of them are in the middle of their ranges and it is good for the prices to move towards the extremes of their ranges before we jump in with our trades.