Gold Prices in Consolidation

As we had mentioned in our forecast yesterday, the gold prices have been consolidating and ranging and beginning to form a base. We believe that it is highly unlikely that the gold prices would be able to turn around and become bullish again anytime soon but the formation of a base could mean that the prices could see a bounce from here which would provide an opportunity for the bears to sell gold at a higher price. The prices are likely to be held down by the next choice of the Fed Chair which is likely to be known on Thursday when Trump is expected to announce his decision.

Gold Likely to Stay Weak

A hawkish choice for the Fed Chair is likely to strengthen the dollar and this would, in turn, lead to another round of weakening in the gold prices. On the other hand, a dovish choice is likely to push the dollar on the backfoot. Also, we have a range of news from the US later in the week which includes the employment and wages report and it could be that the market is positioning itself ahead of the release  of such important data as these data would more or less confirm the rate hike in December, assuming that they come out stronger than expected.

Gold Hourly
Gold Hourly

Oil prices have also been consolidating over the last few days as they approach our final medium-term target of $55. There has been a spurt in the prices of oil after a long period of consolidation and this spurt in the prices is now being tampered down by a period of consolidation. The oil bulls would be happy to know that the prices have not fallen during this time and this should give them a lot of encouragement for the next bullish leg if and when that happens.

Silver prices have also been in a consolidation mode ahead of the range of data later in the week. This data is likely to determine the short-term direction of the dollar and hence that of the silver prices as well and the market is positioning itself ahead of such data.