Gold Prices Coil Into a Range

Gold prices are coiling themselves into a nice range and so far there has been a lot of consolidation going on since the start of the week. We expect this to continue in the short term and we do not believe that there are going to be any major fundamental changes during this period that would warrant a breakout of the larger range. As we have been mentioning many times over the last few days, the gold prices are trading in the larger range between the $1300 and the $1360 region and it is likely to continue to do so. Several things have changed over the last few months and that includes a rate hike from the Fed and a lot of geopolitical tension as well but so far, the effect and the impact of that on the gold prices have not been enough to generate a breakout.

Gold In Tight Range

In fact, there have been several times when the prices have tried to break through either side of the range but each and everytime, there has been a failure which brings us to the question of what, if anything at all, could bring about a breakout in the range. The Fed is expected to continue its policy of hiking rates but the incoming data from the US does not ssupport any accelerated rate hikes as yet and with the 3 rate hikes for the year already priced into the markets, we do not expect any major changes in the gold prices if and when the rate hikes do happen. The other possibility is for the geopolitical tensions to escalate and that would force a lot of funds to be moved into the gold markets triggering a huge rise.

The oil prices continue to trade comfortably above the $66 region and it is likely to continue to trade in a buoyant manner. With the increase in risks and the choppiness of the dollar, the oil prices have favorable conditions to move higher and into the $70 region.

The silver prices have also been trading in a tight range over the last few weeks and again, being the poor cousin of the gold markets, this is likely to continue in the coming weeks as well.