Oil Presents An Opportunity

As we had mentioned in our forecasts yesterday, gold prices continued to range and consolidate between 1260 and 1275 and this theme is set to continue for a few more days as the markets look towards the Fed meeting in the middle of the month for further direction. Though the December rate hike is priced in, which is one of the reasons for the gold prices to flounder, the market would be more interested to know the line of thinking of the Fed as far as further rate hikes in 2017 are concerned. Further rate hikes are likely to be data dependent and with that as the case, the December NFP report and wage earnings should come as a disappointment to the Fed and would make it think twice before it starts worrying about further hikes in 2017. It is unlikely that the data would have been available for Fed to consider and that is why it is more like that the market will be watching the language of the Fed statement very closely. This apart, we continue to expect the gold prices to be trading at their range lows in the near future as well due to the fall in demand and also due to the various curbs imposed on its import by the large consumers like China and India. Gold could, after all, be losing its sheen slowly.

Oil prices also continued to correct, albeit slowly and steadily. We had mentioned this in our forecast yesterday and had asked traders to look for a deeper correction towards $49 or $50 as a place for them to load their longs for the next leg higher. With the deal being agreed between the OPEC producers, it is only a case of the non-OPEC members also endorsing the deal for the next leg of the bull run to begin. We believe that the average price for oil would then be around the mid 50s and thats what the traders should be looking towards once they enter into the longs on a correction. The meeting between the OPEC and non-OPEC producers is scheduled for December 10 and things should be clear after that.

Silver, like the gold prices, continues to consolidate as well and as we have been mentioning in our last few forecasts, we are much more hopeful of a decent bullish run in silver prices and we believe that silver will eventually outperform gold, in terms of ROI, in the medium term as the investors begin to turn their attention away from gold and onto silver.