Gold Dollar Notes

Gold Moves Higher on Weaker Dollar

Gold prices shot higher from the 1320 region and its recovery over the past 2 days has led to a lot of hope for the gold bulls that the rebound would continue in the short term. On Friday, we saw some signs of weakness in the dollar and though there are no specific fundamental or economic factors for the drop in the dollar strength, the stock markets around the world managed to make a recovery and the US stock indices also closed higher which might have served to weaken the dollar during this period. This slight weakness in the dollar was enough for the gold prices to move towards the $1340 region and it continues to trade in that region as of this writing.

Gold Moves Towards $1340

The gold prices have been quite fickle over the past month or so and their price action has been dominated by what the dollar is doing. If the dollar strength increases, we are seeing the gold prices crash down and vice versa and this shows that the gold prices are being highly responsive to the dollar strength. We continue to believe that the gold prices might have reached their high for the medium term as the Fed is set to unveil its medium term monetary policy. With us moving towards the end of the month, we are likely to see the Fed hike rates in the coming month and this is going to place some pressure on the gold prices. The Fed is also likely to state some kind of timeline for the future rate hikes as well and this should lead to a lot of volatility in the coming weeks.

Gold Hourly
Gold Hourly

The oil prices have also moved higher on the back of dollar weakness and also weak inventory data from the US. A combination of these 2 factors has helped the oil bulls to push the oil prices through the $63 region but as we have mentioned before, we expect the oil prices to range between the $60 and $70 region for much of the medium term.

The silver prices have also moved higher during this period and we believe that the market is likely to follow the gold prices, though the moves are expected to be at a lesser extent.