Gold Prices Continue to Remain Heavy

Gold prices continued to correct lower as we had mentioned in our forecast yesterday. With the clean break through the 1320 region, we had said that the next target would be only around 1300 and thats where the prices seem to be heading at this point of time. The dollar strength has become steady and it can be seen that it has been gaining ground against certain currencies over the last 24 hours. Though it has not become a full fledged recovery as yet, the fall in the gold prices can be attributed to the strengthening of the dollar. The other reason for the fall is the improvement in the risk sentiment over the last few days. Gold prices had surged on the back of growing tension in the Korean region but with that going out of the horizon, the risks have also subsided.

Gold Prices Under Pressure

This had led to the funds being pumped into the stock markets which has helped bring in a bullish run in most of the stock markets globally. These funds have flown out of safe havens like gold and silver and that is why we are seeing their prices moving lower. The dollar is likely to hold steady for today and tomorrow in the leadup to the FOMC announcement tomorrow and this is likely to keep the gold prices under pressure in the short term. The market expects the Fed to be hawkish but it remains to be seen whether the Fed can afford to be so as the incoming data continues to be choppy. Though the data continues to remain choppy, there are early signs of a recovery but it remains to be seen what the Fed thinks about it.

Oil prices continued on their bullish mode over the last 24 hours though there was a brief period of correction. We have been having the rig count showing a fall which has raised questions on the supply level being maintained and for now, this has helped the oil prices to move higher. This is likely to keep the oil prices buoyant and as we have been saying over the last couple of months, our medium term target continues to be $55 and higher as this is the price range that would make the oil producers comfortable.

Silver prices have fallen steeply over the last 24 hours and they trade just above the $17 region as of this writing looking pretty weak as they have also been hit by the strength of the dollar and the sagging of the risk sentiment.