Gold Recovers a Little But Is it the End of the Recovery?

Gold prices did finish higher for the day on Friday as the commodity prices recovered a bit during the day on Friday as there was some profit taking from the traders and investors who had bought the dollar heavily ever since the Fed had announced a rate hike and also pointed to further rate hikes in 2017 which should keep the dollar and its yields supported over the next few months atleast. We have been mentioning in our forecasts consistently that any bounce in the gold prices should be viewed as an opportunity to short the commodity as it is likely to keep going down in the short and medium term. But with the holiday season upon us, it is important to trade with tight stop losses and not assume any specific direction for any instrument as the liquidity is likely to be low over the next 2-3 weeks and this might be used by manipulators to move the price this way and that. So, always trade with tight stop losses and also, we foresee some good support for gold prices around the 1100 region and this is something that the traders need to be wary of, as well.

Gold Hourly
Gold Hourly

Oil traders also used the correction in the dollar strength as an opportunity to push the oil prices higher and it trades above $53 as of this writing. As we have said before, we believe that the range between $55 and $60 will be the place where the oil prices are likely to settle down in the short and medium term as the agreement between the OPEC and non-OPEC producers to cut the oil production begins to take effect from January 2017. Till this happens and the effects of that begin to show up in the data, we believe that the oil prices are likely to be swayed this way and that according to the strength of the US dollar. With the dollar in an uptrend, the oil prices are going to be capped now and coupled with the lack of liquidity in the coming weeks, we should see the oil prices trade within a tight range.

Silver prices also recovered slightly, in line with the recovery in the gold prices and managed to push through $16.00 but like gold, it continues to look weak and is vulnerable to get hit by the dollar strength if and when it returns. Traders would be well advised to be ready for some range trading in the coming days as the market settles into a consolidation mode ahead of the holiday season.

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