Gold prices have crashed through the support region in the $1345 region during the course of trading yesterday. We had pointed this out as an important buying region in our forecasts over the last few days and hence it is indeed significant that this region has been broken through and now, this region should act as the resistance on the upper side. This move lower is in line with what is happening in the markets as the dollar has been strengthening all across the board during trading yesterday and this has caused many of the instruments to correct against it. The gold prices are always going to be on the sticky ground if and when the dollar gains in strength.
Gold Under Serious Pressure
The reason for this is the fact that one of the main reasons why the dollar is going to gain in strength is due to the anticipation of further rate hikes from the Fed. If and when that happens, that is going to hit the prices of gold very hard as that would make the dollar very attractive for a lot of investors and would mean that the funds would flow from gold to the dollar. Also, most of the move higher in the gold prices over the last few weeks have happened on very low volume and hence it is always going to be difficult for the gold traders to maintain the bullishness when they are faced with a lot of selling. This is what we saw yesterday as well as the anticipation grows over the Fed hiking rates more than the 3 times that the market expects it to.
Oil prices continue to move lower as the strength of the dollar finally seems to have started to have an impact on the prices of oil. Over the past few months, oil prices seem to have been having their own mind as they continued to move higher irrespective of what was happening to the dollar but over the last few days, we are seeing the first signs of some serious correction in the prices of oil as they now trade just below the $65 region as of this writing and continue to look weak.
Silver prices also fell yesterday on the back of the overall correction in the commodity market and we are seeing the prices now trade near the $17 support region.
This article was originally posted on FX Empire
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