Gold Prices Rocket Through but Caution Needed

The gold prices rocketed higher yesterday on the back of some sustained weakness in the dollar that was seen all across the markets. The prices rose by over $20 during this period as the weakness in the dollar was well utilised by the gold bulls. The dollar weakened due to fears of protectionist methods being followed by the US and it has led to fears that this could lead to a full scale global trade war. Any kind of such fears and uncertainty is likely to benefit the gold prices as the large funds tend to invest in gold and move their funds from risky assets during such a period. It has been a difficult time for the dollar for over a month now as it has been under the pump ever since the Fed hiked the rates in December.

Gold Prices Reach Resistance

While the rate hike was expected to lead to further rate hikes this year and ultimate weakening of the gold prices, it has had the opposite effect as the dollar is the one that has weakened all across the board. It is important that the traders do not get carried away though for many reasons. We are now at an important region of resistance and it would take quite a bit of effort for the prices to push through this region. Also, the last stage of the rise has happened overnight which is generally a period of low volume. So, the traders need to be careful about such moves and we could also see the dollar bearish run being overstretched at the moment. We could well be in for a period of correction and hence it would be advisable for traders to take profit here and wait and watch from the sidelines till the next direction is clear.

Oil prices also broke through higher as they shot through the $65 region and have since broken through the $66 region as well and seems headed for the $70 region. After a long time, the oil prices seem to have been impacted by the weakness in the dollar and it is indeed a measure of the weakness in the dollar that even the oil markets have begun to take advantage of the same.

Silver prices finally managed to have a decently bullish day yesterday after a long period of consolidation as the prices have broken through the $17.5 region during the last 24 hours and continue to trade comfortably above that region as of this writing.