Gold prices closed a week of strong fluctuations when shelter buying from geopolitical tensions continuously confronted pressure from a stronger USD, US bond yields rose and concerns that the US Federal Reserve (Fed) would maintain a tougher stance for longer due to persistent inflation.
Spot gold prices opened the week around 4,539 USD/ounce on Sunday evening. After a short correction at the beginning of the Asian session, gold gradually increased in the first two days of the week as the market continued to monitor developments related to the Iranian conflict and cautious sentiment in the global financial market.
The upward momentum brought gold close to the 4,600 USD/ounce zone before selling pressure returned. This precious metal set a weekly peak at 4,588.64 USD/ounce and then quickly weakened.
The decline accelerated in the US session on Tuesday as the USD strengthened and the market adjusted inflation expectations amid high energy prices and the Fed's cautious stance.
Gold prices then lost the 4,500 USD/ounce mark and continued to plummet to Wednesday's session, at one point hitting a week low of 4,453 USD/ounce before the announcement of the minutes of the FOMC meeting in April.
Meeting minutes show that many Fed officials are still concerned about inflation risks, especially related to energy prices and tariffs, making it difficult for gold to maintain its recovery momentum.
Although gold prices recovered above 4,500 USD/ounce on Thursday and had another stable phase at the end of the week as expectations of cooling Middle East tensions helped bond yields fall slightly, market sentiment is still under pressure from weakening US consumer confidence data, inflation expectations increase and "hawkish" statements from Fed Governor Christopher Waller.
Closing the week, spot gold price stood at 4,508.25 USD/ounce.
Kitco News' weekly gold survey shows that Wall Street analysts still strongly lean towards a short-term downside scenario, while individual investors still maintain a positive sentiment despite weakening gold.
Mr. Marc Chandler – Managing Director of Bannockburn Global Forex said that gold has repeatedly tested the support zone of 4,500 USD/ounce but has not shown clear signs of recovery.
According to him, to regain the upward trend, gold needs to surpass the 4,600 USD/ounce zone. In case of continued weakening, the price may retreat to the 200-day moving average around 4,370 USD/ounce.
Mr. Adrian Day - Chairman of Adrian Day Asset Management forecasts that gold may continue to fluctuate in a slight upward trend next week.
In the opposite direction, Mr. Rich Checkan – Chairman of Asset Strategies International said that the short-term outlook is still negative, as the ceasefire between the US and Iran is facing the risk of collapse.
According to him, CPI and PPI data released last week both increased more strongly than expected, increasing the possibility that the Fed will continue to maintain high interest rates.
Mr. Kevin Grady – Chairman of Phoenix Futures and Options said that liquidity in the gold market is currently quite low as many investors mainly carry out position-shifting activities from June contracts to August instead of making new large bets.
He believes that anticipation is overwhelming the market as investors do not want to bet heavily in any direction due to risks from information related to Iran.
I think that currently the risk of gold increasing and decreasing is almost equal because any news can cause the market to fluctuate strongly," he said.
According to a Kitco News survey, among 13 experts participating in the forecast for next week, only 15% expect gold prices to increase, while 62% forecast to decrease and 23% believe the market will move sideways.
Meanwhile, online surveys with individual investors show that 56% still expect gold to increase next week.
The upcoming trading week will be shortened due to the Memorial Day holiday in the US, but the market will still monitor a series of important economic data such as consumer confidence, Q1 GDP, PCE index, weekly unemployment claims and durable goods order data and new home sales.
Mr. John Weyer – Director of Trade Protection at Walsh Trading believes that gold is still heavily dependent on developments in the Middle East.
According to him, if the Iranian conflict lasts, the negative impact on the global economy may become increasingly apparent, especially through high energy prices and widespread inflationary pressure.
Mr. Alex Kuptsikevich – Senior analyst at FxPro forecasts that gold may continue to fall to the 4,370–4,400 USD/ounce range next week if there is no clear breakthrough in the US-Iran negotiation process.
