Gold prices managed to recover a bit over the past 24 hours after briefly threatening to break down through the crucial 1220 support region. We did see the gold prices make a sneak peak into the region below 1220 during the London session but the bulls managed to hold on to that region and over the course of the day, we saw the gold prices recover, helped by the FOMC minutes that was released very late in the day. A lot was expected from the minutes as the markets thought that the minutes would contain information that would give hints on when the next rate hike would be and what the Fed members think about inflation and economy. But what we got was information that was already known, which is that the Fed expects inflation and the economy in general to recover in the coming months and that the next rate hike would be dependent on the data.
Gold Recovers But Short Term Looks Choppy
This lack of direction led to a correction in the dollar prices as the traders who had bought the dollar in anticipation of a larger recovery, post the FOMC minutes, were left disappointed and they trimmed their holdings and now have begun to focus on the ADP, that will be released later in the day, and also on the NFP, which will be released tomorrow. For now, we see the gold prices rising higher and it is now at the 1226 region as of this writing and it remains to be seen on how the London traders would react to the minutes as they get a chance to have their say when the European markets open later.
Oil prices fell yesterday as the US stated its desire to sell off some of its inventory to repay its debts and we also saw the crisis in the Middle East continuing in a stalemate in the short term. The dependency on oil has been reduced to a great extent over the past decade, with the arrival of several alternative and cleaner sources of energy and this is one of the main reasons why we are seeing the oil prices struggle to build a long bullish run despite concerns over its supply. The demand is only going to become less and less in the long term as more and more countries switch to alternative sources of energy and this is going to keep the oil prices under pressure in the long term.
Silver prices continued to trade near their range lows in the $16 region as the recovery seen in the gold prices did not have any impact on the silver prices which continue to be in a state of pressure. This is likely to continue in the short term.
This article was originally posted on FX Empire