Gold Prices Stagnate As Low Volatility Returns

The gold prices have been generally stable over the last 24 hours or so as the waxing and waning in the dollar strength seems to have had little impact on the gold prices. But the prices continue to hover around the 1265 region and as we mentioned in our forecast yesterday, this is the region where the gold traders are likely to face a lot of selling and it could lead to a bout of correction in the prices in the short and medium term as well. The change in the market dynamics, where the central banks have shifted to a policy of rate hikes and no longer favor holding the rates or cutting the rates, is bound to have a deep impact on the gold prices in the medium and long term as well and that is what we are seeing.

Market Likely to be Slow

This is one of the main reasons why we believe that the gold prices are likely to be in a long term downtrend and this move up should be taken with a pinch of salt, so to speak. We believe that the prices are likely to move down in the medium term and hence the bears are still likely to be in control during this period. This move down should be driven by the strength in the dollar which is not apparent at this point of time but which should rise higher in due course of time. When that happens, the gold prices are likely to come under pressure and we should see the prices moving lower in the medium term.

Oil prices continued to consolidate for another day, the story that has been going on for quite sometime now and it is likely that the story would continue for the short term as we head towards low volatility and liquidity.

Silver prices have also stagnated just above the $16 region and waiting for a lead from the gold market on which direction it should be moving in, in the short term. It is likely that the silver prices would also take the cue from the gold market and move lower in the days ahead.