Gold Prices Consolidate Ahead of NFP

Like many of the other major instruments in the market, the gold prices also spent much of the last 24 hours in a consolidation and ranging mode ahead of what is likely to be an important day today, as far as the short term direction is concerned. We have the NFP data release later in the day today and this employment report assumes added significance due to the fact that the latest reports from the US have been quite weak and have not raised confidence about the US economy. In fact, this is one of the reasons why the dollar has been floundering across the board over the last few weeks and the dollar bulls would be desperately looking for some turn around in the data which should help the dollar recover in the short term.

Gold Likely To Continue Consolidation Till NFP

So, the market is likely to watch this data very closely and the leadup to the news release is likely to see a lot of consolidation. Yesterday, we saw the gold prices did for a brief while towards the 1262 support region but it was met with a lot of buying in that region which has since pushed the prices back towards the 1270 region below which it trades now, as of this writing. We expect this kind of choppy action to continue till the evening. If the data comes out strong, we would expect the prices to break through the 1262 region and move lower towards the 1248 region in the short term. If the economic data from the US continues to flounder, then the gold prices could easily move towards 1280 and further.

The price action in oil over the past couple of days can at best be defined as choppy as the market is a bit confused on which way it wants to move. As we had mentioned earlier, the region between $50 and $52 is seeing a lot of selling and so the bulls need to collect a lot more momentum before they launch their next attack on that region. Also, the inventory data from the US has also been showing a suprising build up in the inventory which has made the investors baulk at the thought of pushing the prices even higher. We continue to believe that the oil prices are likely to move high beyond the $55 region in the medium term and any weakness in the oil prices should be viewed as an opportunity to go long on the instrument in anticipation of higher prices.

Silver prices continue to consolidate above the support region at $16.5 and like in gold, this consolidation and ranging is likely to continue till the release of the NFP data later in the day today, which would then determine the short term direction for the silver prices.