Gold Prices Consolidate at Range Highs

Gold prices moved lower during the course of trading yesterday in what is seen as a sign of consolidation than a reversal as yet. The dollar began to steady itself and gain some strength during this period after being on the backfoot over the last 2 weeks of December. Some strong incoming data in the form of manufacturing PMI and a slightly hawkish FOMC meeting minutes, which said that the Fed members continue to look towards gradual rate hikes, helped the dollar along its way higher and this added pressure on the gold prices. We had mentioned in our forecast yesterday that the region around 1320 and the region around 1345 are likely to present a stiff challenge to the gold bulls and so far, that has been the case.

Gold Moves Within Range

Looking ahead to today, it would be worthwhile to note that the dollar strength continues as of this writing and if it begins to gain pace, then it is likely that the gold prices could move quickly lower. The move higher had happened on low volume and in such a case, it does not require too much of an effort to scare the gold bulls out of their positions and push the prices lower which is what the bears would be looking to do if and when the dollar  strength begins to gain pace.

Oil prices continued to move higher as it now trades in the $62 region. This move higher has been caused due to the concerns over supply as protests begin to break out in Iran which has brought in a period of uncertainty in the markets. With the demand picking up at the beginning of the year, the prices have had to move higher and now the bulls could have $65 in their sights.

Silver prices also corrected lower on the back of weakness in the commodity markets and now they trade just above the support region around $17 and it remains to be seen whether the return of liquidity to the markets is going to push the prices even lower.