Gold In Tight Range Due to Lack of Fundamental Drivers

Gold prices were not much impacted by the global events yesterday and they continued to trade below the 1260 region as of this writing and the same was the case yesterday as well. The focus for yesterday was on the euro with the ECB rate decision and announcement as well followed by the press conference and the impact of that on the markets was minimal. We also had the retail sales data from the US which came in stronger than expected but again, there was no pressure on the gold prices as such and it continued to trade strongly through the course of the day yesterday. It now seems to be a good and steady position at this point of time and with the liquidity and the volatility expected to become lower and lower over the holidays, we do not expect much change in this kind of price action.

Gold Lacks Momentum

Gold prices have received a boost this week by the dovish Fed which cited issues with the inflation data and this pointed to uncertainty and doubts in the minds of certain Fed members on the pace of rate hikes in the US in 2018. While a large part of the market expects 3 rate hikes in 2018, this is still uncertain at this point of time and if this is not achieved, then that would be dovish for the dollar which should help the gold prices recover further in the medium term. Moreover, the craze over the bitcoins seems to be numbing down over the last week or so and this is also likely to benefit the gold market.

Oil prices have also been chopping around since the beginning of this week and it was more of the same yesterday as it shrugged off the weak inventory data from the day before and moved higher yesterday back through the $57 region. This choppiness is expected to continue in the short term.

Silver prices also weakened slightly yesterday as it trades just below the $16 mark as of this writing and this kind of price action would continue for the next couple of weeks.