Gold Prices Move Higher On Dollar Weakness

Gold prices got a boost from the weakness in the dollar yesterday though the incoming data from the US turned out to be much stronger than what was expected. The gold prices have been locked within a $30 range over the last couple of weeks and even though the gold prices have shot higher over the last 24 hours, they continue to trade within the range of the last couple of weeks. We are also seeing the stock markets around the world coming under enormous pressure due to domestic and international factors and this has led to the flow of funds into the gold and silver markets in the search for safety in the short term. While the US struggles to come to terms with the delay in the tax cut plan for the corporates by a year or so, the European stock markets have also been under pressure due to the strengthening euro. On the other hand, the Asian stock markets have also been under pressure over the last 24 hours and this has helped the gold prices to move higher.

Gold Higher But Within Range

It is under these circumstances that we have the inflation data from the US in the form of CPI that would coming in later today. This data is likely to determine whether the US economy is in a position to take in another rate hike in December and hence this piece of data would be watched very closely. If the data comes in weak, then we should see the gold prices shoot higher as the hopes of a rate hike from the Fed anytime soon begins to fade. If the inflation data comes in stronger, then we are likely to see the gold prices move back to the lows of their range around the 1260 region.

The oil prices have corrected lower over the last 24 hours, something which we have been saying in our forecasts since the beginning of the week. The prices have now moved to the $55 region and could present a nice opportunity for those who continue to believe in the bullishness of the oil prices for the long term. The prices have corrected on the back of the continued tension in the Middle East region but this is something that has been going on for quite some time and hence the effect of that should begin to wear off pretty soon.

Silver prices have also moved over the $17 region as it awaits the CPI data from the US later in the day which should determine the dollar strength over the short term. We should see the prices move below the $17 on the back of some strong inflation data from the US.