Gold prices continue to trade quietly near the lows of its range over the last couple of days as the investors are locked in a battle to determine which would be the next short term direction for the gold prices. It is clear that the gold prices are under the control of the bulls ever since the Fed announced a hike in its rates but the prices are now near the lows of its range and also near its strong support region and with this in mind, we could see a small bounce in the prices which will be more a correction of the downtrend rather than a change in trend. As we had mentioned earlier, the region around 1248 is likely to serve as a strong support for the prices and a break through this region is likely to target the 1220 region in the short term.
Gold Likely to Bounce
Though the Fed has chosen to hike rates and largely ignore the incoming data of late, it has to be noted that the housing, employment and the inflation data from the US has been quite weak of late. We have to wait and see whether this is going to be a trend going forward or, as the Fed says, it is only a small blip in the journey that is the economy. If this trend continues, the market would not get the rate hike in September as it expects now and it may not even get another rate hike for the rest of the year and this would then be bullish for the gold prices in the medium term.
Oil prices also continued to consolidate and range near the lows of its range and as we had mentioned in our forecast on Friday, it is now near the region which has served as a very strong support over the last many months and hence we should be able to see atleast a small bounce in the prices from this region in the short term, though, in the medium and long term, we expect the oil prices to continue to get weaker as the production and the inventory data continue to get stronger and stronger.
Silver prices also traded near its range lows and continue to trade in a very weak manner as the investors look out for assets that are likely to yield better returns.