Commodities Fall as Dollar Storm Gathers

We had been mentioning in our forecasts over the last few days that the gold prices were looking weak and traders would need to watch for signs of break of support or a bounce before getting into any trade as far as gold was concerned. We had also specifically mentioned in our forecast yesterday that with a break of the strong support at the 1248 region, there was little chance of a recovery in the gold prices and the next stop for the gold prices would be somewhere around the 1220 region and thats what we saw yesterday as the gold prices continued their push lower and it trades at 1227 as of this writing.  

Gold Prices Fall

This weakness in the gold prices has been caused by a combination of factors that includes the dollar being strong and steady across the board over the last few days. It has been helped by the FOMC meeting minutes and some strong data including the ADP employment report and the unemployment claims data as well. All this good data has also buoyed the market in terms of their liking for the dollar and they have also taken the FOMC meeting minutes as a hawkish signal indicating a rate hike in the US in June. The traders have begun to price in the same and all these factors have been responsible for the gold prices to crash towards the 1220 region in a very quick manner.

We should expect some support in this region for the short term but with the NFP, wages report and the speeches from a few Fed members being lined up for today, we can expect a lot of volatility in the gold market. We would advise the traders to remain on the sidelines and watch for the price action before getting into any trade.
Oil prices continued to move lower yesterday and they easily achieved our short term target of $47 during the course of the day yesterday and they continued lower and sit above $45 as of this writing. There were reports that the OPEC production cut deal would continue in the second half of the year and some of the members might be inclined to cut more than what was agreed but the market simply didnt seem to care. There was a brief bounce on that news but that quickly disappeared and the market decided that the increase in production in Libya and the incoming data was enough to easily outweigh any expectation of a continuing deal and sold off oil.
Silver prices also continued lower yesterday, on the back of a strong dollar and general weakness in the commodity markets. Though the region around $15.9 is expected to hold any correction, any bounce is likely to be limited to $17 in the short term.

COPYRIGHT © 2017. Pramod Baviskar. Dalal street winners advisory and coaching services.