Gold prices continued to consolidate and range below the strong support turned resistance at 1220 and by the looks of it, it seems as though this weakness is set to continue in the short and medium term as far as gold is concerned. There is not much that the traders and the investors can do if gold is hit from all sides and that is what we are seeing now. On the one hand, we are seeing the gold prices being hit as the investors bail out of gold and move to higher yielding currencies and bonds due to the positive outlook on the respective economies and also due to the increased rate outlooks in the different countries like Canada, US and the UK. On the other hand, we are seeing stronger dollar which is also hitting the base of the gold prices and a combination of these factors is what is bringing a lot of pressure on gold prices.
Gold Likely to Stay Weak
The prices have been falling over the last 2-3 weeks and with the key region of 1220 now being broken and with the market having spent more than 24 hours below it, with not much effort to break above it once again, we believe that the bears are fully in control and we should see the gold prices continue to move downwards even further in the coming days with 1200 and 1180 being the likely targets in the short term. We do not expect this pressure to ease even in the medium term as the various countries reverse their rate policies and begin to complete atleast one cycle of the same over the next few months and so the gold bulls should prepare themselves for more pain.
Oil prices seem to be forming a base and showing signs of recovery as of this writing as the bears have been unable to push through $44 and every such failed move has been met with a bounce. The bounces have been shallow so far but it is clear that there is some strong buying going on just above the $44 region and it may be a good idea to go long in this region with a stop loss just below the previous low just below $44. We still believe that the lows for the oil prices are in and we should see it moving up in the short term.
Silver prices also spent the day in a consolidation mode and they trade just above $15.5 as of this writing. The prices are expected to continue to trade weakly in the short and medium term in line with the gold prices.
This article was originally posted on FX Empire