Gold Crashes Lower to Support as Dollar Rebounds

The gold prices fell hard on Friday as the dollar appeared to be seeing the first signs of a revival. This move came about due to the strong NFP data from the US which came in stronger than expected. This continued the trend of stronger data from the US which was a strong ADP data and we also saw a slightly hawkish tone from the Fed in the FOMC minutes. A combination of all these is showing us that there is some serious strength building in the dollar which hasnt yet broken through the surface. The dollar is likely to be the focus of the markets in the next couple of months as we see whether it can rebound from the fall that we have been seeing in it since the middle of December.

Gold Moves Lower

If the incoming data continues to be strong, then we are likely to see the Fed encouraged to hike rates in a quick manner which should help the dollar to rebound even further. We have been saying that if and when such a situation arises, then it is likely that the gold prices would be the ones that are worst hit. The gold prices have risen over the last couple of months, mainly on low volume and quite against the fundamentals and reality and that is the reason why it is likely to come under pressure on first signs of recovery in the dollar.

Oil prices dropped lower during the course of the day on Friday on the back of a strengthening dollar. Last few days, for the first time in weeks, we are seeing the dollar strength having an impact on the oil prices and this has led to a choppy mode of trading in the oil markets around the $65 region and this is likely to continue in the short term as we see some signs of weakness in the oil prices.

Silver prices also broke through the $17 region and fell hard, something that we had been warning our traders about, over the last few days and it is expected to continue to remain weak as the dollar rebounds.