Oil Prices Continue to Consolidate, Is it Time to Fall?

Gold prices continued to trade strongly yesterday and today as well as the increase in global risks and fears and the weakness in the US dollar all contributed to the increase in the gold prices. With this break through the 1200 region, we are likely to see the gold prices spurt further higher but we should be having a decent correction before that happens. Gold prices are in a strong resistance region and looking at their price action so far and also looking at the fact that the gold prices are making heavy work in this stage of progress, we believe that it is likely to undergo some correction back towards the 1170 region before it starts the next leg of this run. It is to the credit of the gold bulls and also thanks to the dollar weakness that the gold prices have been able to make such a run when all seemed to be lost for the bulls and the bears were in total control when the prices were in the 1150 region. We will continue to keep a close eye on the prices in this region and look for weakness which is likely to set in at any point of time. If the move upwards continues to run then we could be looking at the 1250 region pretty soon but as pointed out earlier, we believe that the prices will first need to make a correction before the next leg.

Oil continued to trade strongly but the fact that it has not yet made progress towards the $60 mark should be something that is worrying the bulls. The implementation of the production cut deal has begun and the dollar has also been weakening across the board and under normal circumstances, this should have been enough to push the oil prices towards the $60 mark by now. But we find that the oil prices continue to consolidate and range in the $53 region and neither has it progressed nor has it corrected back below the $50 region as well. The more time is spends here, the less confident will the bulls become and this may bring in a large correction. The oil inventory data has also not shown any major drop in supply so far and this could also be a reason why we have not seen any further progress in the oil prices.

Silver has broken through the $17 region and it looks set to follow the gold prices back downwards before it begins its next leg of the bull run that it is currently undergoing.